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Oil plunges to eight-month low on strong dollar, recession fears

Commodities Sep 23, 2022 03:16PM ET
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© Reuters. A general view shows the oil refinery of the Lukoil company in Volgograd, Russia April 22, 2022. REUTERS/REUTERS PHOTOGRAPHER
 
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By Scott DiSavino

NEW YORK (Reuters) -Oil prices plunged about 5% to an eight-month low on Friday as the U.S. dollar hit its strongest level in more than two decades and on fears rising interest rates will tip major economies into recession, cutting demand for oil.

Brent futures fell $4.31, or 4.8%, to settle at $86.15 a barrel, down about 6% for the week. U.S. West Texas Intermediate (WTI) crude fell $4.75, or 5.7%, to settle at $78.74, down about 7% for the week.

It was the fourth straight week of declines for both benchmarks, the first time this has happened since December. Both were in technically oversold territory, with WTI on track for its lowest settlement since Jan. 10 and Brent for its lowest since Jan. 14.

U.S. gasoline and diesel futures were also down more than 5%.

The U.S. Federal Reserve raised interest rates by a hefty 75 basis points on Wednesday. Central banks around the world followed suit with their own hikes, raising the risk of economic slowdowns.

"Oil tanks as global growth concerns hit panic mode given a chorus of central bank commitments to fight inflation. It seems central banks are poised to remain aggressive with rate hikes and that will weaken both economic activity and the short-term crude demand outlook," aid Edward Moya, senior market analyst at data and analytics firm OANDA.

The U.S. dollar was on track for its highest close against a basket of other currencies since May 2002. A strong dollar reduces demand for oil by making the fuel more expensive for buyers using other currencies.

"We had the dollar exploding higher and pushing down dollar-denominated commodities like oil and growing fears over the looming global recession that is coming as the central banks raise interest rates," said John Kilduff, partner at Again Capital LLC in New York.

The euro zone's downturn in business activity deepened in September, a survey showed, suggesting a recession looms as consumers rein in spending and as governments urge energy conservation following Russia's moves to cut off European supply.

Wall Street's main indexes slid more than 2% on Friday as investors feared the U.S. Federal Reserve's hawkish policy actions to quell inflation could trigger a recession and dent corporate earnings. The dollar (DXY) index reached its highest in over two decades, pressuring oil prices.

Russia launched referendums aimed at annexing four occupied regions of Ukraine, raising stakes of the war in what Kyiv called a sham.

On the supply side, efforts to revive the 2015 Iran nuclear deal have stalled as Tehran insists on closure of the U.N. nuclear watchdog's investigations, a senior U.S. State Department official said, easing expectations of a resurgence of Iranian crude oil exports.

Oil plunges to eight-month low on strong dollar, recession fears
 

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Comments (10)
Hady Naqvi
Hady Naqvi Sep 25, 2022 8:17AM ET
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The time is gone when oil is available below 70, oil taken impact of rising Dollar nothing else, this will easily paas 90 for sure
Binu Mohan
Binu Mohan Sep 25, 2022 7:08AM ET
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oil will fell down or touch 85 at least??
John Dislias
HephaestusTrades Sep 24, 2022 7:52AM ET
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Where is the recession? Lol everywher traffic and nothing change to life . The north europe dont have OIL neither gas . Back to $90 from Next week .
Hady Naqvi
Hady Naqvi Sep 24, 2022 7:52AM ET
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The whole Europe will face maasive shortage of Energy as the winter is knocking the doors, this will boost Oil prices atleast for 90 then it will easily jump to 100.
António Carlos Galhano
António Carlos Galhano Sep 23, 2022 3:54PM ET
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And where are those who predicted oil prices at 120 and some even at 150? Where have these well-informed analysts gotten themselves?
EL LA
EL LA Sep 23, 2022 2:09PM ET
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The US producers were wise after all not to listen to Biden and increase production. It was a trap!
Brad Albright
Brad Albright Sep 23, 2022 2:09PM ET
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Holy snikees, is that really how you see the world? That the president misrepresents his domestic policy in order to "trap" a segment of industry?
Sylvia Doloff
Sylvia Doloff Sep 23, 2022 2:06PM ET
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thier is a global recession and putin is an absolute catalyst he does not care I think he will die soon from cancer
ge Kret
ge Kret Sep 23, 2022 1:01PM ET
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This is a buying opportunity for oil!!
John Dislias
HephaestusTrades Sep 23, 2022 6:47AM ET
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Soon $90
Historical Movies
Historical Movies Sep 23, 2022 6:06AM ET
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If the recession is there then why gold is down
Henry Limanto
Henry Limanto Sep 23, 2022 6:06AM ET
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Gold no longer safe heaven, instead US dollar is
Max Chan
Max Chan Sep 23, 2022 6:06AM ET
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When the USD goes up, everything priced in USD goes down. Gold included.
ge Kret
ge Kret Sep 23, 2022 12:50AM ET
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Its always quiet before the boom… next week oil will be quite the opposite so get on board now. thanks Uncle Vlad!
Midnight Trader
Midnight Trader Sep 23, 2022 12:50AM ET
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👍
Hakim Damian
Hakim Damian Sep 23, 2022 12:50AM ET
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is that a green light for WTI
Prakash Dodia
Prakash Dodia Sep 23, 2022 12:50AM ET
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👍
 
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