Following its first monthly decline since November, Brent was down around 4.1% on a weekly basis and WTI was down 3.4%. Brent crude fell $10.73 on Tuesday, the third-biggest one-day drop for the contract since trading began in 1988.
U.S. oil benchmarks have been down so far this week, tracking broad declines in commodity markets, as restrictive monetary policies in major economies threaten a downturn. Two of the Fed’s most hawkish policymakers, Christopher Waller and James Bullard, have backed a 75 basis-point hike in interest rates this month to rein in overheating inflation, while downplaying fears of an economic downturn.
Meanwhile, oil prices are still up about 35% this year as the global economic recovery coincides with supply disruptions to Russia caused by the war in Ukraine.
In the latest development, a major export route for Kazakh oil is at risk of being suspended as it appeals a Russian court order to temporarily close it.
Crude oil prices also fell after the Norwegian labor strike ended. Crude and natural gas prices also slipped as the euro fell to a 20-year low against the dollar.
Gas prices in the European Union and the U.K. surged more than 17 percent amid supply shortages in Russia. Record energy prices in the EU and the UK could tip their economies into recession.U.S. nonfarm payrolls data showed the economy added more jobs than expected in June, suggesting that
The labor market is strong, giving the Fed enough ammunition to hike rates by another 75 basis points this month.
U.S. energy companies added two oil rigs this week, bringing the total to 597, the highest since March 2020.
Economic worries may have rattled oil prices this week, but the market is still flashing bullish signals. That’s because from this point on, the supply crunch is more likely to intensify than ease. A Western ban on Russian oil exports has propped up prices and triggered a rerouting of flows as the Organization of Petroleum Exporting Countries (OPEC) and allied producers struggle to deliver on promised output increases.
We may see the same high volatility next week. The weekly time frame suggests that a period of consolidation is likely; the range is likely to be between $98.00 and $112.00.
Overall, we suggest that selling on the jump strategy will benefit the trade. In the domestic market, crude oil is well supported at Rs 7,970.00, holding below it can show Rs 7,760, while upside Rs 8,390 and Rs 8,550 are resistances. The rupee will play an important role in determining the direction of crude oil this week.
(The author is VP Commodities, Mehta Equities Ltd) (Disclaimer: Advice, advice, views and opinions given by the experts are their own and do not represent the views of The Economic Times)