Brent Falls Below $100 as U.S Inflation Jump Fuels Recession Fears
Brent price falls below $100 per barrel again as crude oil prices weakened early on Thursday as recession worries continue to dominate trading activities.
Following the uncertainties that lie ahead, the market is expecting a big rate hike from the Federal Reserve after the United States (U.S) reported a day earlier that inflation in June ran at the hottest in 41 years, while a report showed rising US inventories of crude oil and refined products.
Earlier today, the West Texas Intermediate (WTI) crude for August delivery was last seen down US$1.10 to US$95.20 per barrel, while September Brent crude, the global benchmark, was down US$1.01 to US$98.56. The United States on Wednesday said inflation ran at a 9.1% pace in June, more than expected and the highest since 1981.
The rise is expected to convince the Federal Reserve to raise rates by as much as a full percentage point when its policy committee meets later this month, following on a similar move by the Bank of Canada on Wednesday.
READ: Treasury, OMO Bills Trade Quiet as Inflation Fears Rise
The Energy Information Administration on Wednesday reported that U.S crude oil inventories unexpectedly rose by 3.3-million barrels last week, while gasoline stocks were up 5.8 million barrels in the heart of the US driving season.
“The price action in crude oil continues to be dictated by the battle between traders looking for an economic slowdown and the physical market which continues to signal tightness.
“Demand, however, has started to show signs of weakness with the EIA reporting a counter-seasonal drop in U.S gasoline consumption to the lowest on a seasonal basis since 2000,” Saxo Bank said in a note.
The drop also comes as the US dollar rises to fresh 20-year highs, making oil more expensive for international buyers. The ICE dollar index was last seen up 0.85 points to 108.8, the highest since June 2002.
EIA Sees US Crude Oil Production Hitting Record High in 2023
The US Energy Information Administration forecast record US crude oil production in 2023 at 12.8 million barrels per day, up from an expected 11.9 million barrels per day of production in 2022.
In its July Short-Term Energy Outlook, the EIA expects the Brent crude spot price to average $104 per barrel in 2022 and $94/b in 2023. Brent averaged $71/b in 2021.
Global oil inventories will rise 0.8 million b/d in 2022 and remain unchanged in 2023, reflecting rising production of liquid fuels in the US and the Organization of the Petroleum Exporting Counties, paired with slowing liquid fuels consumption growth, the EIA said.
Global consumption of liquid fuels is forecast to rise to grow by 2.2 million b/d in 2022 and by 2.0 million b/d in 2023, according to the agency. # Brent Falls Below $100 as U.S Inflation Jump Fuels Recession Fears
