Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Crude Tests $95 as Recession Fear, Rocketing Dollar Shake Root of Oil Rally

Commodities Jul 06, 2022 03:23PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters.

By Barani Krishnan

Investing.com -- The oil bears have tasted blood, and they aren’t stopping.

U.S. crude futures tumbled another $4 to test the $95 per barrel support on Wednesday before settling off its lows, as pessimism from recession talk extended the selloff in oil for a second day in a row.

Brent, the global benchmark for crude, plumbed briefly below $100 a barrel the first time since April 25.

A rocketing dollar ahead of more rate hikes by the Federal Reserve has also shaken the roots of the energy rally seen since Russia's invasion of Ukraine in February and the resulting sanctions on Moscow. In minutes of its June policy meeting released on Wednesday, the Fed said it feared high inflation could become an entrenched feature of the U.S. economy and the only way to avert that would be appropriate interest rate hikes to balance price escalation with growth.

At Wednesday's settlement, WTI was down 97 cents, or almost 1%, at $98.53. The intraday low was $95.17. In just two sessions, the U.S. crude benchmark had lost almost $15 or 14%.

Brent settled at $100.69/bbl, down $2.08 or 2.02% after a session low at $98.59. Like WTI, Brent has also lost almost $15, or 13%, over two days of trading. 

Citigroup says WTI could collapse to $65 a barrel by the end of this year and slump to $45 by end-2023 if a demand-crippling recession hits. Technical charts studied by Investing.com suggest that a drop to $85 is possible before the end of July, and the challenge for WTI is to break below $92.40 first.

The Dollar Index, which pits the greenback against six major currencies, continued its ascent from overnight, leaping to above 107, its highest since December 2002. The dollar has rallied with few stops since November last year on bets of aggressive rate hikes by the Federal Reserve, or Fed, which has just started delivering on those expectations.

Oil’s latest move lower came as a closely-watched gauge of the US services sector fell to its lowest in 20 months in June, although it held up better than economists expected due to pressures from high costs for labor and other inputs.

Separately, the U.S. Labor Department signaled that the red-hot labor market may be starting to cool. Job openings, as measured by its monthly survey, fell in May, to a level of 11.254 million that is still high by historical comparison. The number was around a quarter of a million more than expected ahead of time, and the department also revised May's number substantially higher to 11.681 million.

The job openings data came ahead of Friday’s more important June nonfarm payrolls report, which is expected to show a smaller jobs growth compared with May. Economists tracked by Investing.com say some 268,000 payrolls were probably added last month — versus the 390,000 in May — holding unemployment at 3.6% for a third straight month. A jobless rate of 4% or below is seen by the Fed as full employment.

“While our view remains that higher consumer prices are required to balance the oil market this summer, we acknowledge that significant and large shocks continue to distort fundamentals,” analysts at Goldman Sachs said in an energy market outlook.

Crude Tests $95 as Recession Fear, Rocketing Dollar Shake Root of Oil Rally
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (3)
Barani Krishnan
Barani Krishnan Jul 06, 2022 10:47PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
The spamming monkeys are occupying at least six of the comments slots here.
David Vaughan
David Vaughan Jul 06, 2022 12:23PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Why is the recession only impacting commodities?
نايب اميري
نايب اميري Jul 06, 2022 12:23PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
■》■■
dhean Djaya
dhean Djaya Jul 06, 2022 11:58AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
I dont Know. what your mind.?
Naveed Arshad
Naveed Arshad Jul 06, 2022 11:58AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
love llolll Lloyd lllolllolooplol
dhean Djaya
dhean Djaya Jul 06, 2022 11:58AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
make it RCA.. if not lol..
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email