Monday’s oil price drop was due to concerns about China’s economy and
a U.S. interest rate hike. Both of these could reduce global fuel use.
Brent fell to $84.40 per barrel and WTI to $79.78. Jerome Powell’s
comments about raising interest rates to fight inflation shook
commodity prices. But oil prices rose briefly after China lowered its
stock trading stamp duty to wake up its sluggish capital markets.
Tony Sycamore of IG Markets compared China’s small rate changes to
“rearranging deck chairs on the Titanic,” predicting a weak
Manufacturing PMI. However, Tina Teng of CMC Markets said Powell’s
hawkish stance hasn’t hurt the energy sector, which is doing well due
to a “soft landing” for the U.S. economy. Baker Hughes reported that
U.S. oil rigs have been declining for nine months, which is positive.
Tropical Storm Idalia threatens to become a hurricane in the
Caribbean, complicating matters. Idalia’s path could cause short-term
power outages, raising oil prices, according to meteorologists.
ANZ Research believes the oil supply story needs to be changed. They
believe lifting sanctions on oil-producing nations like Iran and
Venezuela could change the game.
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