Brent under pressure as global headwinds mount
Front-month ICE Brent has slumped $2.91/bbl lower on the day, to $82.94/bbl at 09.00 GMT.
PHOTO: Getty Images
Upward pressure:
The OPEC+ Joint Ministerial Monitoring Committee has recommended maintaining the group's current oil output policy, which was in line with market expectations.
The International Monetary Fund (IMF) has predicted that China and India, two of the world's biggest oil consumers, will see strong economic growth this year. China’s GDP growth will rebound to 5.2% this year, and India's will remain a "bright spot" for the global economy with 6.1% growth, according to the IMF.
Downward pressure:
The US Federal Reserve (Fed) has increased its key interest rate by only 25 basis points, but Fed Chairman Jerome Powell has hinted that further increases may be needed to curb “elevated” inflation.
The Fed’s willingness to “overshoot with tightening” could hurt growth over the short-term, says OANDA's senior market analyst Edward Moya.
The European Central Bank and the Bank of England are also expected to increase their key interest rates by 50 basis points today. A continuous rise in interest rates can contribute to put the economy at risk of recession.
Official US Energy Information Administration data shows a build of 4.14 million bbls in commercial US crude stocks. The market has been unimpressed with the lower-than-expected build. US refinery utilisation has declined, while gasoline stocks have risen.
“The rise in refined products came despite relatively low refinery utilisation rates, signalling weak demand. This weighed on sentiment,” writes ANZ commodity strategist Daniel Hynes.
A reduced likelihood of Russia cutting production is also weighing on sentiment. The OPEC+ consensus says that “the situation is quite stable” and “prices are reasonable owing to supply and demand,” according to Russian Deputy Prime Minister Alexander Novak, quoted in Russian state media TASS.
By Konica Bhatt
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