{"id":3665,"date":"2023-05-03T11:28:57","date_gmt":"2023-05-03T15:28:57","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/commodities\/oil-tanks-again-as-u-s-crude-beneath-70-on-economic-worries\/"},"modified":"2023-05-03T11:28:58","modified_gmt":"2023-05-03T15:28:58","slug":"oil-tanks-again-as-u-s-crude-beneath-70-on-economic-worries","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=3665","title":{"rendered":"Oil tanks again as U.S. crude beneath $70 on economic worries"},"content":{"rendered":"
\n

Investing.com — The selloff in oil isn’t ending, and it might not really until the market hears the Federal Reserve’s latest take on US interest rates.<\/p>\n

Crude prices hit new five-week lows on Wednesday, tumbling more than 4% after the 5% plunge in the previous session, hours before the Fed’s Federal Open Market Committee, or FOMC, was scheduled to announce its for May.\u00a0<\/p>\n

“Today was always likely to mark the end of the US central bank’s tightening cycle – not that it has explicitly signaled this – but we’ve now reached a stage in which every rate hike could have unwanted and unintended consequences,” said Craig Erlam, analyst at online trading platform OANDA.<\/p>\n

“The US may be heading for recession and they may not be alone which doesn’t bode well for crude demand.”<\/p>\n

\u200b\u200bNew York-traded West Texas Intermediate, or , for June delivery was down $3.36, or 4.7%, to $68.31 per barrel by 11:23 ET (15:23 GMT). The session low was $68.28.<\/p>\n

Chart-wise, WTI could lose after $2 or so, although a rebound might come in before that, Sunil Kumar Dixit, chief technical strategist at SKCharting.com, said.<\/p>\n

“If selling intensifies, the decline in WTI can extend to the 200-week SMA of $67,” Dixit said, referring to the Simple Moving Average. “But there’s also the chance of a recovery towards the $71.80- $72.60 levels as the market is quite oversold as it is.”<\/p>\n

London-traded for July delivery was off by $3.30, or 4.4%, to $72.02. The session bottom was $72.<\/p>\n

The sell-off in oil accelerated after the\u00a0U.S. Energy Information Administration, or EIA, reported on Wednesday a modest drawdown in U.S. crude stockpiles for last week. The agency also cited a surprise build in gasoline inventories and a slighter larger than expected drop in distillate balances.<\/p>\n

To fight , the Fed has added 475 basis points to rates in nine increases since March 2022. Rates now stand at a peak of 5%, compared with just 0.25% at the start of the coronavirus pandemic in March 2020. Another quarter-point hike from today will bump up rates to a peak of 5.25%.<\/p>\n

Inflation itself, as measured by the Fed\u2019s favorite price indicator \u2014 the Personal Consumption Expenditure, or , Index \u2014 grew by just 4.2% in the year to March this year from a four-decade high of 6.6% in the 12 months to March 2022.<\/p>\n

Despite the cooling in prices, annual inflation remains at more than double the Fed\u2019s 2% target.\u00a0<\/p>\n

The U.S. banking sector, meanwhile, exhibited new signs of stress this week with the takeover of . Adding to concerns were a potential debt default by the United States and readings on US\u00a0 and durable goods that came in lower than expected.<\/p>\n

inventories fell by almost 1.3 million barrels last week, declining for a third straight week though far less than the prior week, while gasoline stockpiles actually rose versus expectations for a drop, the EIA reported.<\/p>\n

Balances for distillates, meanwhile, fell just a little more than forecast, the EIA said in its Weekly Petroleum Status Report for the week ended April 28.<\/p>\n

Analysts tracked by Investing.com had expected the EIA to report a drop of 1.280 million barrels for the week ended April 28, versus the previous week’s draw of 5.054M.<\/p>\n

The Biden administration, meanwhile, released 1.3 million barrels from the Strategic Petroleum Reserve, or SPR, last week, the EIA report showed.<\/p>\n

On the front, the EIA reported a build of 1.743M barrels. Analysts had expected the agency to cite a draw of 1.157M barrels instead, after the previous drop of 2.408M barrels for the week to April 14. Automotive fuel gasoline is the No. 1 U.S. fuel product.<\/p>\n

With , the EIA reported a drop of 1.191M barrels. Analysts had forecast a 1.084M barrel draw, against a decline of 0.576M in the prior week. Distillates are refined into , diesel for trucks, buses, trains and ships, and fuel for jets.<\/p>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Investing.com — The selloff in oil isn’t ending, and it might not really until the market hears the Federal Reserve’s latest take on US interest rates. 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