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WTI plummeted to around $70.63 following the headlines of US Secretary of State Blinken’s visit to Saudi Arabia.
Central banks around the world are gearing up for fresh rate hikes to bolster their hand in the fight against stubborn inflation.
Recession fears will rise sharply as lending activity by commercial banks will further decline due to higher interest rates.
West Texas Intermediate (WTI) futures on the New York Mercantile Exchange saw strong selling during the European session. Oil prices have fallen vertically and have fallen to around $70.63. Oil prices have given back most of the gains spurred by Saudi output cuts.
The U.S. dollar index (DXY) has staged a nice bounce as it finds bids around key support at 103.80. A solid recovery in the U.S. dollar index also weighed on oil prices.
Oil prices have failed to break out of their bear market trajectory despite Saudi Arabia’s announcement of output cuts. It appears that lackluster demand is the main catalyst dragging oil prices lower. Central banks around the world are gearing up for fresh rate hikes to bolster their hand in the fight against stubborn inflation.
This month, the Federal Reserve (Fed), European Central Bank (ECB) and Bank of England (BoE) are expected to further tighten their monetary policies. The street is confident that the central bank belonging to the common continent will definitely strengthen its interest rates, and the whole opinion on the Fed’s interest rate decision is mixed.
Hopes of a global recession will rise sharply after a new cycle of rate hikes, as lending activity by commercial banks will further decrease. Investors should note that Germany has reported a recession after consecutively showing a contraction in gross domestic product (GDP).
Oil prices are under pressure as U.S. Secretary of State Antony Blinken visits Saudi Arabia from June 6-8. The visit to the world’s largest oil exporter comes just days after Riyadh pledged to further cut oil output, a move that could heighten tensions in U.S.-Saudi relations, which have been overwhelmed by the kingdom’s human rights record and U.S. policy toward Iran, Reuters reported. Controversial and tense.
