Oil prices are falling in volatile trading.. Brent crude is above $120
Oil prices fell, in volatile trading today, Wednesday, June 15, 2022, amid fears that the economic recession and new closures of the Corona virus in China will affect oil demand.
Crude prices had started trading on a rise today, before an expected big increase in interest rates by the US Federal Reserve.
Oil Prices Today
The price of futures contracts for the benchmark Brent crude – for delivery next August – decreased by 0.08%, to reach $ 120.73 a barrel.
The price of future contracts for West Texas Intermediate crude – for delivery next July – decreased by 0.56%, recording $ 118.32 per barrel, according to data seen by the specialized energy platform.
US Fed Moves
Rising inflation has investors and oil traders preparing for a big move by the Federal Reserve this week – a 75 basis point increase, which would be the biggest increase in US interest rates in 28 years -.
“A strong hawkish signal from the Federal Reserve may increase fears of a global recession, which could dampen the energy market,” said Leona Liu, an analyst at Daily FX in Singapore.
“If the Federal Reserve announces a 75 basis point hike tonight, oil prices may fall significantly against the dollar in the short term,” she added.
She indicated that the Fed’s hawkish approach could push investors into the safe-haven dollar and hit risk-sensitive assets, such as oil.
On the demand side, the recent Corona outbreak in China, which was tracked over the past hours in Beijing, has raised fears of a new phase of lockdowns.
However, China’s economy showed signs of recovery in May after declining the previous month, as industrial production rose unexpectedly.
In its monthly report, the Organization of the Petroleum Exporting Countries (OPEC) stuck to its forecast that global oil demand will exceed pre-pandemic levels in 2022.
“Overall, the supply and demand situation remains constrained, and I cannot expect that reality to change until the global economy slows sharply,” said Jeffrey Haley, chief market analyst at OANDA.
However, providing some price support is due to the tight supply, which has been exacerbated by the decline in exports from Libya amid a political crisis that has damaged production and ports.