Futures on US West Texas Intermediate Crude Oil extended losses from the prior trading day on Thursday, as market players reassessed recession risk and fuel demand amid rising interest rates in developed economies.
“Oil markets remained under pressure as investors were concerned that U.S. rate hikes would stall an economic recovery and dampen fuel demand,” Kazuhiko Saito, chief analyst at Fujitomi Securities Co Ltd., was quoted as saying by Reuters.
“The U.S. and European hedge funds have been selling off their positions ahead of the end of the second quarter, which is also cooling investor sentiment,” he added.
Saito said he expected WTI Crude to drop below the $100 per barrel mark before the US July 4th holiday.
Yesterday WTI plunged a bit over 3% after Federal Reserve Chair Jerome Powell said the bank was not attempting to tip the economy into recession to curb inflation. Still, Powell noted the Fed remained fully committed to bringing prices under control, “if we are to have a sustained period of strong labor market conditions that benefit all.”
Meanwhile, Russia’s President Vladimir Putin said on Wednesday that the country was rerouting its trade and oil exports towards the BRICS group of emerging economies following Western sanctions.
China reported record high crude oil imports from Russia in May, a 55% surge compared to the same month last year.
“With more data proving that Russian crude supply is less affected by sanctions than most people have previously estimated, the supply side may see a larger-than-expected increase in the near term,” Haitong Futures analysts wrote in an investor note.
As of 8:23 GMT on Thursday WTI Crude Oil Futures were losing 1.58% to trade at $104.51 per barrel. Yesterday the black liquid slipped as low as $101.53 per barrel, which has been its weakest price level since May 11th ($98.20 per barrel).
At the same time, Brent Oil Futures were edging down 0.12% on the day to trade at $109.87 per barrel. Yesterday Brent Oil went down as low as $107.06 per barrel, which has been its weakest price level since May 19th ($105.75 per barrel).
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