Sep 29, 2022 09:27AM ET
VOT Research Desk
Key Insights – U.S Morning Rundown
Oil prices stabilized on Thursday as traders weighed the passing of Hurricane Ian, rising geopolitical tensions, falling U.S. inventories, a strong U.S. dollar, and an upcoming OPEC meeting.
U.S. crude futures were trading 0.2% higher at $82.31 a barrel at 09:25 ET (13:25 GMT), while the Brent contract was up 0.2% to $88.20.
The arrival of Hurricane Ian in the Gulf of Mexico disrupted U.S. crude supply, which has led to some strength in crude oil over the last two sessions.
However, the major storm has now made landfall in Florida, and while the Sunshine State has been severely affected, the nation’s major oil facilities largely escaped damage.
The Energy Information Administration reported that crude stocks in the United States fell by 215,000 barrels last week, dispelling some concerns about falling short-term demand at the world’s largest consumer. This also helped support prices.
However, central banks around the world, and the Federal Reserve in particular, are raising interest rates to combat rising inflation, likely at the expense of future growth. As a result, the crude market is still on track for its first quarterly loss in more than two years.
As a result of the Fed’s aggressive actions, the US Dollar Index has reached 20-year highs. This has hurt the oil market because it has made dollar-denominated crude more expensive for foreign buyers.
The U.S. GDP decreased by 0.6% in the second quarter, according to data released earlier this week, indicating a slowdown in the world’s largest economy.
In addition, the German consumer price index increased 10.0% year-over-year in September, suggesting that the European Central Bank will continue to aggressively raise interest rates after raising them by 125 basis points in each of its previous two meetings.
Following the alleged sabotage of the Nord Stream gas pipelines in the Baltic Sea, traders are also having to take into account the heightened tensions that exist between Russia and the West.
The head of the International Energy Agency, Fatih Birol, said on Thursday that Russia was to blame for the explosions that resulted in significant gas leaks, calling their perpetrators “very obvious.”
The EU’s response will be discussed at a summit next week in Prague.
A meeting of the Organization of the Petroleum Exporting Countries and its allies, OPEC+, is also scheduled for next week. According to Reuters, some of the most influential members have started talking about cutting oil output.
Last month, the group of top producers announced a modest output cut in an unsuccessful attempt to halt the fall in oil prices; this time, they may be forced to do something more substantial. Russia may propose a cut of one million barrels per day, according to Reuters.
