Bloomberg News reports that it was found that oil managed to erase gains just before the Federal Reserve meeting. During this event, it is anticipated to signal a continuation of the measures for restraining economic growth, overshadowing Russia’s threat of war escalation and causing disruptions in energy supplies.
It was also found that West Texas Intermediate dropped below $84 on Wednesday, reversing a previous surge to above $86 per barrel triggered by Vladimir Putin’s call for escalating the war. As far as the broader equity markets are concerned, they are presently in a wait-and-see mode, especially as the central bank is anticipated to have plans to raise the interest rates by as much as 75 basis points. A move of this kind could lead to an economic recession and suppress demand for oil, which already manifests signs of slowing down.
US crude stockpiles surged in the previous week, whereas demand for diesel dropped to the lowest point in a decade. The decline comes just when the consumption picks up. A counter-seasonal drop in demand, often exhibited as a proxy for economic activity, implies that rising inflation is affecting those industries driven by fuel.
Bloomberg News reports that Rebecca Babin, who is associated with CIBC Private Wealth Management, a senior energy trader says macro markets are being regarded as elephants in the room with the rates and dollar placing a lid on the crude rallies.
For the first quarter loss in more than two years, crude is on track as there are concerns related to the global economic slowdown, which is slated to weigh on the outlook for the demands in energy. The decision of the Fed is supposed to be followed by various central banks in the European continent right up to Asia, which are also anticipated to surge the borrowing costs.
The bearish sentiments were coupled with the US crude stockpiles that were found to rise by 1.14 million barrels in the last week. In contrast, gasoline stockpiles rose by 1.57 million barrels per an Energy Information Administration report obtained on Wednesday.
