Breaking News
Investing Pro 0
Free Webinar - Crude Oil Trading 2023 | Thursday, February 9, 2023 | 01:00PM PST Enroll Now

Oil Tumbles in Belated Nod to Fed, “China’s Pivot” on COVID

Commodities Nov 03, 2022 03:04PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters.
 
LCO
+0.14%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
CL
+0.13%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
US10Y...
-0.59%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
DXY
-0.03%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

By Barani Krishnan

Investing.com -- “Better late than never” is what the oil bears will say — though the bulls will disagree.

Crude prices tumbled Thursday in a belated reaction to the Federal Reserve’s higher for longer vow on rates, as both New York-traded West Texas Intermediate and London’s Brent erased the previous session’s gains made over sharp U.S. inventory draws that ignored the central bank’s actions.

China’s pivot on COVID — even if the Fed did not have one on rates — also did crude prices in. Beijing was back to playing up its zero-COVID policy on Thursday, a day after speculation that the largest oil importer might relax social curbs to join the rest of the world, which has moved on from the two-year-long pandemic.

WTI settled its latest session down $1.83, or 2%, at $88.17 per barrel. In Wednesday’s trading, the U.S. crude benchmark finished up 1.8%, after breaching $90 the first time in three weeks with an intraday high of $90.36.

Brent settled Thursday’s trade down $1.49, or 1.5%, at $94.67. The global crude benchmark rose 1.8% in the previous session after a three-week peak at $96.42.

“China stands by its zero-COVID policy and global central bank tightening is crushing economic activity…which means the short-term crude demand outlook will probably get slashed,” observed Ed Moya, analyst at online trading platform OANDA. 

Fed Chair Jerome Powell says he's not sure about a soft landing or recession for the U.S. economy as the nation weathers its worst inflation in four decades. He's certain about one thing though -- that it's premature to pause on the central bank's aggressive rate hike regime.

The Fed on Wednesday raised rates by 75 basis points for a fourth straight time in November. The sixth rate hike of the year effectively brought rates to a peak of 400 basis points from just 25 in March. 

The central bank said rates had to be “sufficiently restrictive” to bring inflation down to its 2% objective over the medium term. Inflation, as measured by the Consumer Price Index, is about four times higher than the Fed’s target now — standing at 8.2% during the year to September, after a 40-year peak of 9.1% in the 12 months to June.

The Fed’s hawkish talk also drove the dollar up in Thursday’s trade, adding to the weight on dollar-denominated commodities such as crude. The Dollar Index, which pits the greenback against the euro, yen, pound, Canadian dollar, Swedish krona and Swiss franc, hit a three-week high of 113.035.

Bond yields, benchmarked to the 10-year Treasury note, also hit a three-week peak of 4.216.

Investors, economists and business leaders have warned for some time that the Fed’s aggressive rate hikes could land the world’s largest economy in a recession — just 2.5 years after the last slowdown that broke out with the coronavirus pandemic in mid-2020.

The U.S. economy did sputter in the first two quarters of the year, with back-to-back negative growths of 1.6% and 0.6% in Gross Domestic Product that technically placed the nation in a recession. Third-quarter GDP, however, came in at a resilient 2.6%, raising questions of whether another slowdown was likely or a soft landing was possible instead.

Aside from the Fed, the Bank of England also raised rates by 75 basis points this week, its most in 33 years, adding to the specter of a global economic slowdown.

Oil Tumbles in Belated Nod to Fed, “China’s Pivot” on COVID
 

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.
  • Any comment you publish, together with your investing.com profile, will be public on investing.com and may be indexed and available through third party search engines, such as Google.

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 (9)
Roger Miller
Roger Miller Nov 03, 2022 6:44PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Markets don’t make “belated” moves. That’s ridiculous.
Craig Bellinger
Craig Bellinger Nov 03, 2022 6:37PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
“Tumbles” ok…lol
John Avenetti
John Avenetti Nov 03, 2022 6:34PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
SCAMdemic you mean.
Robert Cutler
Robert Cutler Nov 03, 2022 6:21PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Perhaps crude oil ppb is headed to Putin's age
Warm Camp
Warm Camp Nov 03, 2022 6:21PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
plus 100
Stephen Fa
Stephen Fa Nov 03, 2022 6:00PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
I'm hoping for more consolidation and then taking long again on $USO.
Warm Camp
Warm Camp Nov 03, 2022 6:00PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
The further consolidation is unlikely. The Election Day is near, oil has been released from the lock of SPR releases, no pun intended.
Randolph Russ
Randolph Russ Nov 03, 2022 6:00PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Joe
Warm Camp
Warm Camp Nov 03, 2022 5:48PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
FWIW. The following quote is from an earnings report released this evening by an oil-related stock in my portfolio. I post it here because the situation on the oil market, imho, is presented quite concisely and accurately. Start of quote In an environment of high geopolitical and macro-economic risk, global economic growth is slowing, and energy prices have come off their recent highs. Conditions in the energy industry, however, remain supportive for an increased level of investment, with low levels of spare capacity and inventories, uncertainty about the impact of further sanctions on Russian exports and a renewed focus on energy security around the world. Global energy provision is constrained and all sources of supply will be needed to meet growing demand. End of quote
Warm Camp
Warm Camp Nov 03, 2022 5:32PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
You fight a futile battle. Going forward every oil inventory report will show multi-billion drops in storage numbers for all categories. No ways to stop oil price. Surrender.
Warm Camp
Warm Camp Nov 03, 2022 5:32PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Ouch, it meant multi-million drops. Hope you got the idea anyway.
Victoria Majewski
Vicky007 Nov 03, 2022 5:14PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
The world should focus it's focus on other resources as well as renewable form of energy...
Warm Camp
Warm Camp Nov 03, 2022 5:14PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
It depends where you see the future of the world. Using exclusively renewable forms of energy means loss and capitulation. The victory will be with countries, continuing using more efficient sources. This planet is a cruel place, actually. Vae Victis.
Maks Mars
Maks Mars Nov 03, 2022 3:28PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Oil still most overpriced thing of the planet need policies with a concrete stronger effect
 
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