Choose country & language:

Oil dips on US inflation data

Home >  Daily Market Digest >  Oil dips on US inflation data

Written by:
Myrsini Giannouli

14 September 2022
Share the article

Oil prices dipped on Tuesday and WTI fell below $86 per barrel. If the WTI price declines, it may encounter further support near $66 per barrel, while resistance can be found near $90.5 per barrel and higher up at the $98 per barrel level. 

Investors’ appetite for risk sank on Tuesday, as US CPI data released exceeded expectations. The Fed is likely to maintain a hawkish stance to combat persistently high inflation rates. Markets are currently wavering between a 50-bp and a 75-bp Fed rate hike in September, with odds favoring a 75-bp rate hike after Tuesday’s inflation data. Oil prices dipped following the release of the US CPI data, as risk sentiment sank.

Rising odds of aggressive rate hikes push oil prices down. Severe rate hikes stifle economic activity fuelling recession fears. Last week, the ECB performed its largest rate hike ever, increasing its interest rate by 75 bps. The global economic slowdown and recession concerns are decreasing the oil demand outlook, putting pressure on oil prices. 

Supply concerns prop up oil prices though, as new obstacles to the Iran nuclear deal raise doubts on whether Iran is committed to the deal. If the deal goes through, it can add more than a million barrels of oil per day to the global market providing some relief to oil demand.

OPEC+ members agreed last week to cut down production by 100,000 barrels per day to offset the potential return of Iranian barrels to oil markets. The organization has seen oil pricing slipping over the past month and has decided to curtail oil production to keep oil prices high. OPEC+ members strive to defend the $100 per barrel key level, despite mounting global recession risks. 

Over the past few months, Russia’s war against Ukraine has destabilized oil markets. G7 finance ministers have agreed to impose a cap on Russian oil prices and Russian President Vladimir Putin has threatened to retaliate by halting oil and gas exports if price caps were imposed. 

WTI 1hr chart

TRADE WTI

The content provided in this material and/or any other material that this content is referred to, whether it comes from a third party or not, is for information purposes only and shall not be considered as a recommendation and/or investment advice and/or investment research and/or suggestions for performing any actions with financial products or instruments, or to participate in any particular trading strategy and cannot guarantee any profits. Past performance does not constitute a reliable indicator of future results. TopFX does not represent that the material provided here is accurate, current, or complete and therefore shouldn't be relied upon as such. This material does not take into account the reader's financial situation or investment objectives. We advise any readers of this content to seek their own advice. Without the approval of TopFX, no reproduction or redistribution of the information provided herein is permitted.

Written by:
Myrsini Giannouli

Share the article:

Latest news

Dollar slides as US yields ease

Myrsini Giannouli 05 October 2022

Gold extends gains as US yields slip

Myrsini Giannouli 05 October 2022

Oil soars on OPEC output cut concerns

Myrsini Giannouli 05 October 2022

Cryptocurrencies edge higher as market sentiment shifts

Myrsini Giannouli 05 October 2022

Why TopFX

10-years

10-years

industry presence
as a Liquidity Provider

Spreads

Spreads
from 0.0 pips

and reliable execution

Segregated

Segregated

client funds

First-class

First-class

customer support

Open your Live Account in 3 Steps

Step 1

Fill in the registration
form and click
"Create account".

Step 2

Once you are in the client secure area, please proceed with uploading your Proof of Identity and Proof of Residence.

Step 3

When your live account is approved, you can deposit funds and start trading on your chosen platform!