Marginally rising oil prices despite volatility
Volatility persisted throughout the day as investors anticipated another rate hike from the US Federal Reserve. The Bank of Canada increased interest rates by 100 basis points on Wednesday.
Following a recent sharp decline due to recession fears, crude oil prices fluctuated slightly higher on Thursday.
The September Brent contract on the Intercontinental Exchange was trading at $99.80 per barrel at 11:25 a.m., up $0.23% from the previous close. WTI’s August contract on the Nymex remained at $96.30 a barrel.
Ravindra Rao, Head of Commodity Research at Kotak Securities said: “Crude recovered from lows gaining support from supply risks relating to Russia and OPEC and IEA’s warning about tighter global market and depleted inventories.”
However, despite the likelihood of another rate hike by the US Federal Reserve, volatility persisted throughout the day. The Bank of Canada increased interest rates on Wednesday by 100 basis points.
Rao pointed out that the rise in oil stocks in the US as a result of a less optimistic outlook for global growth and ongoing weakness in the US equity market continue to put pressure on oil prices.
“Crude oil has managed to come off the lows however general bias may be on the downside unless risk sentiment improves,” he said.
Additionally, the European Commission cut its GDP prediction for 2022 and 2023, allaying market concerns about the future for oil demand and escalating worries of a worldwide recession.