Oil prices ended the week caught between the headwinds of a tighter global supply and a lacklustre economic outlook eroding consumers' purchasing power.
Macroeconomics
On Thursday, the greenback took off over the value of 150 Japanese yen – a symbolic price mark – for the first time since the 1990s.
A strong dollar reduces foreign investors' purchasing power in other currencies and thus demand. Therefore, the Fed reinforced expectations that the central bank could raise rates aggressively early next month, which should contribute to a significant slowdown in activity and demand. As for inflation, it barely fell in the United States in September over one year, to 8.2% against 8.3% in August.
U.S. Dollar Currency Index (DXY), daily chart
Fundamental Analysis
Crude prices have oscillated between losses and gains this week as concerns over the global economic slowdown clash with caution over tighter supply. The market seems to be receiving mixed signals now, with falling U.S. oil inventories indicating increased demand in the country, while weak economic signals are having an adverse impact (on prices).
U.S. Crude Oil Inventories
On Wednesday, the Energy Information Administration's (EIA) released the weekly change in crude oil stocks, showing a drop of 1.725 million barrels, while the forecasted figure predicted 1.380 million barrels in excess.
Source: Investing.com
Geopolitics
Belarus could take further steps towards direct involvement in the war in Ukraine, As food corridor talks continue between representatives from the United Nations and Russia in order to maintain an agreement on the departure of ships from Ukrainian ports. A "hidden mobilization" would be underway after the announcement of the creation of a joint military group between Russia and Belarus, according to the independent Belarusian newspaper "Nacha Niva". So far, the Belarusian army has not participated in the fighting on Ukrainian territory. Since the beginning of the conflict in Ukraine, Belarus has served as a logistics platform for its Russian ally.
Technical Charts
WTI Crude Oil (CLZ22) Futures (December contract, daily chart)
RBOB Gasoline (RBZ22) Futures (December contract, daily chart)
Brent Crude Oil (BRNZ22) Futures (December contract, daily chart) – Contract for Difference (CFD) UKOIL