Oil shrugs off 7% amid recession fears, posts first weekly decline in a month

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Oil shrugs off 7% amid recession fears, posts first weekly decline in a month

On Friday, both US WTI (West Texas Intermediate) and UK crude oil futures’ prices shrugged off as much as 6 per cent with both benchmarks reporting their first weekly percentage declines in more than a month, as frets of an impending recession in the United States which appears to be inevitable after US Fed’s commitment to an ultra-hawkish monetary policy alongside a contraction in labour market, weighed heavily on investors’ mind.

In point of fact, in the day’s sharp downfall in crude oil contracts’ prices were almost entirely catalysed by a number of panicky moves from Central Banks across the globe, raising concerns among many market participants.

On Wednesday, following a two-day meet of US Federal Reserve, the US Central Bank had decided to hike its benchmark borrowing cost by 75 bps to 1.5 per cent, while US Fed policymakers also had addressed that they would continue to hike rates aggressively and forecasted an interest rate of around 3.4 per cent by end-2022, roiling the market with pushing the US Dollar to the highest level since the December of 2002.

A higher valuation of American Dollar conventionally affects crude oil futures’ prices negatively.

Crude oil tumbles 7 per cent

Citing statsitics, in the day’s commodity market wind-down, UK crude oil futures’ prices plummeted 5.6 per cent to $113.12 per barrel, whole US WTI crude oil contracts’ prices dipped 6.8 per cent to $109.56 a barrel.

UK crude posted weekly declines for the first time in five weeks, while US WTI crude oil futures’ prices had botched to gain in the week for the first time in nearly two months. Meanwhile, addressing to growing frets of a global-scale recession, a senior market analyst at OANDA, Edward Moya said, “Crude prices tumbled as the dollar rallied, Russia signalled oil exports should increase, and as global recession fears grow”.