Despite tumultuous trading, oil prices maintained stable on Monday as concerns over soaring inflation and energy costs pushing the world economy into a recession outweighed China’s continued adoption of a loose monetary policy.
Following a 6.4% decline the previous week, Brent oil futures were down 1 cent, or 0.01%, to $91.62 per barrel. The U.S. Following a 7.6% fall the previous week, West Texas Intermediate crude was down 15 cents, or 0.2%, at $85.46. With the Fed expected to continue raising rates at least through next year, there are concerns that demand destruction may worsen, according to Dennis Kissler, senior vice president of trading at BOK Financial.
China’s Monetary Policy and a Trembling Market
In tumultuous trading on Monday, oil prices remained stable as concerns that soaring inflation and energy costs may push the world economy into a recession outweighed China’s continued adoption of a loose monetary policy.
After falling 6.4% last week, Brent oil futures were down 1 cent, or 0.01%, to $91.62 a barrel. The U.S. After falling 7.6% the previous week, West Texas Intermediate crude was down 15 cents, or 0.2%, at $85.46. Dennis Kissler, senior vice president of trading at BOK Financial, said, “U.S. inflation remains a hot subject and there are worries that demand destruction will intensify.” The Fed should hike rates at least into next year.
Price hikes are being restrained in the meantime by a strong U.S. currency and the prospect of future Federal Reserve interest rate increases.
James Bullard, president of the St. Louis Fed, stated on Friday that inflation had grown “pernicious” and was difficult to control, necessitating prolonged “frontloading” through bigger rate rises of 0.75 percentage points. According to IMF official Gita Gopinath, inflation in the United States is still persistent, while growth in the European Union should slow to 0.5%. According to Craig Erlam, senior analyst at OANDA, it’s been another few weeks in oil markets, from global growth concerns to super-sized OPEC+ supply cutbacks, and it seems they’re yet to calm down truly.
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