Amid Feds Meeting Minutes Crude Oil Further SlipsFebruary 24, 2023
It seems that there is no stop to crude oil’s downward movement. Lately, the price of crude oil is declining further and further deep.
On Wednesday the price of crude oil became further fragile when the Feds meeting minutes have been declassified.
As the result, the WTI Crude Oil Future saw a decline in its price by 0.5% and is currently priced at $76.02 a barrel.
On the other hand, Brent crude oil plunged by 0.6% and currently being available at $82.58 per barrel.
The recent reversion of crude oil price records a straight loss for the third consecutive trading week.
The Feds meeting discussion shows that the Feds are more likely to carry on their hawkish stance.
As a result of this hawkish stance overall commodities market seems quite disturbing because USD is getting more and stronger against commodities. Now, if Feds increased the interest rate, oil will further plunge.
Oil Is Trapped In Between All These News
Currently, the commodity market is dominated by so many uncertain reasons and oil is trapped in between this news.
The fears of upcoming inflation, the fear of upcoming economic recession, and the fear of interest rate hikes.
It seems that currently, the market is very sensitive to economic numbers. Hence the price of most commodities has become fragile.
Feds’ action, most probably the increase in interest rates is the biggest for the price of oil, this increase in the policy rate for an extended period of time is not good for economic growth.
Now, if inflation worries again started to mount this will be dual trouble for oil in terms of its price.
Feds have also talked about the staggering retail sector growth and the recent boom in the services sector.
Moreover, China’s industrial revival was also discussed. Feds also looked at the demand-supply equation of crude oil.
Some market experts do believe that higher demand due to China’s imports can lead to an increase in crude oil prices.
But, if inflation mounts in the future and the Feds increase its policy rate for longer than expected time, this demand will not be able to help crude oil in terms of its price.
However, the Feds meeting concluded with the unanimous remarks that the current hawkish stance needed to be prolonged.
Higher Expected Inflation Can Further Slow Down Economic Activities
Crude oil’s demand is heavily linked to economic growth and production. But the recent claims that inflation can be higher than expected is another harsh outcome.
Intense inflation is likely to have a negative impact on economic activities especially since the manufacturing industry will see a sluggish environment.
As the result, the demand for crude oil can fall significantly in the U.S. As of now, the market seems to agree that a hawkish monetary policy can be the best decision at the moment.
But the hawkish stance is not enough to ensure the economic revival Feds need to do a lot more than that.
The future of the oil market will remain range bound. But as soon as economic uncertainties will be vanquished, crude oil will get rid of this range bound pattern.
Amid all this current depressing news, there is something positive for the crude oil investors after all.
Market experts do believe that the second half of 2023 is very lucrative for the crude oil market. In the second half of 2023 crude oil prices likely regain momentum.
The biggest reason is that China will import crude oil to the peak of its capabilities and U.S. economic outlook will be much more stable.
Now, Russian oil export is likely to crumble in the coming months, which means China has to rely on WTI crude oil.
This means China has to rely on U.S. oil in order to fulfill its needs. That is why the second half of 2023 is the best time to invest in crude oil.
Those investors who can bear the losses should invest at the moment when crude oil is at its low.