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Oil Prices Pull Back As US Recession Fears Resurface

OIL

Oil prices are lower today after rising moderately on Wednesday. Brent is down 0.9% to $76.03 and WTI is down 1% to $70.16, down around $10 from end-2022. Both are off of their intraday lows but are facing whole number support levels. The USD index is 0.4% lower.

  • Oil is struggling after the Fed said that there wouldn’t be any rate cuts this year and that it will hike further if needed to bring inflation down. Also, Treasury Secretary Yellen said there’s unlikely to be a “blanket” deposit insurance scheme. Crude markets have been nervous about a tightening-induced US recession which has been exacerbated by recent banking turmoil.
  • In addition to demand worries, there is concern on the supply side too. US stocks continue to rise and there is uncertainty over Russian output cuts. However, Goldman Sachs remains bullish oil.
  • A number of European central banks meet later and are all expected to increase rates despite recent banking turmoil. The BoE is forecast to hike by 25bp, the SNB 50bp and the Norges bank 25bp. In the US jobless claims, new home sales and Kansas & Chicago activity indices print.

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