Home Forex WTI sees dip to near $80.00 as global growth forecasts downgrade

WTI sees dip to near $80.00 as global growth forecasts downgrade

by SuperiorInvest
  • Oil prices are expected to fall further as Western central banks raised interest rates further.
  • Gasoline demand in the US has fallen sharply as US corporations cut back on investment.
  • OPEC+ cut production targets by 3.58 million bps to support oil prices.

West Texas Intermediate (WTI), the futures on the NYMEX, is facing selling pressure as it attempts a bullish turnaround. Crude oil prices are hovering around $83.00 and are expected to drop further to near $80.00. In the broadest sense of the word, black gold shows vulnerable performance over the past three weeks after giving up $90.00 psychological support.

Many defiant global catalysts have produced an intense selloff in oil prices. Starting with the hawkish stance of Western central banks on their interest rates rates where the agenda of ensuring price stability sacrifices the range of economic activities. A decline in economic activities as corporations do not invest due to the unavailability of cheap money on the table. The postponement of expansion plans also lowered demand forecasts. Eventually, demand for oil plummets.

Demand for oil in the powerful US economy is falling sharply. U.S. gasoline demand has fallen sharply by 8.5 million barrels per day over the past four weeks. This is the result of accelerating price pressures that have forced households to stick only to the bare essentials.

Meanwhile, an unchanged policy statement from the People’s Bank of China (PBOC) dented sentiment towards oil prices. With China’s overall demand not growing and price pressures strictly lower, rate cuts were expected. However, the neutral stance taken by the PBOC has weakened the oil bulls.

On the supply side, OPEC+ cut total production by 3.58 million barrels per day, or 3.5% of global demand. Despite the drop in global supply, oil inventories are rising, reinforcing signs of a recession ahead.

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