Oil price under pressure as demand fears grow
Investors are concerned that central banks may not be done with interest rate hikes.
Meanwhile, in the US, consumer confidence rose to an 18-month high this month, suggesting the Federal Reserve will likely have to continue to raise interest rates to slow demand. Last week Jerome Powell said the market should expect two more rate hikes by year end. Today, the Fed chairman is due to talk at the ECB forum in Sintra.
(Video Transcript)
Oil Prices
Oil prices fell more than 2% in yesterday's session. Investors are concerned that central banks may not be done with interest rate hikes. And this basically means that there's likely to be a continuation of the recent drawdown in demand. I want to show you the chart here. First of all, for us crudes, you can see it bumping along the bottom here, not too far away from the line of support at 6695.
The European Central Bank
We are at the moment in the early part of the trading day today, on this Wednesday, at 6802. If you get a kind of close below here, The next line of support is then the lows that we had back on the second day, 63 and 76 yesterday. The European Central Bank president, Christine Lagarde, confirmed that unless there is a substantial change in the inflation outlook, the central bank will continue to raise rates in July and thereafter as needed.
US consumer confidence
Meanwhile, in the US, consumer confidence rose to an 18-month high this month, suggesting the Federal Reserve will likely have to continue raising rates to slow demand. Last week, you remember Jerome Powell, the chairman of the Federal Reserve, coming out and saying the market should expect two more rate hikes by the end of the year, 25 basis points each, according to market expectations.
Crude oil stocks
The Federal Reserve (Fed) chairman is due to talk at the European Central Bank (ECB) forum in Sintra today. Meanwhile, the API inventory data out yesterday had no impact whatsoever on oil prices, with crude oil stocks falling by around 2.4 million barrels, gasoline inventories down by about 2.85 million, and dissident stocks rising by around 800,000 barrels. But the big news in the oil sector is just how much demand could well shrink.
If we see a continuation of interest rate rises, which continue to impinge on the amount of money in the markets,
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