Oil prices rose slightly on Tuesday after falling to nine-month lows on Monday. WTI price rose above $78 per barrel on supply concerns. If the WTI price declines further it may encounter support near $66.5 per barrel, while resistance can be found near $86.9 per barrel and higher up at the $90.5 per barrel level.
Supply concerns supported oil prices on Tuesday, as a Hurricane in the Gulf of Mexico threatens to disrupt oil distribution. In addition, prospects of reviving the 2015 Iran nuclear deal have decreased considerably.
Oil prices are also supported by fears of further escalation in the Ukraine crisis. Russian President Vladimir Putin announced the partial mobilization of Russian military reserves from civilians last week. Putin also renewed threats to halt all energy exports and threatened western allies with nuclear action. 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.
Fears that rising interest rates may tip major economies into recession, limiting oil demand, are pushing oil prices down. Aggressive rate hikes stifle economic activity fuelling recession fears and pushing oil prices down. Last week the BOE voted to raise its interest rate by 50 basis points, while the US Fed raised its interest rate by 75 basis points. Federal Reserve Chair Jerome Powel has raised expectations for future rate hikes, stating that the Fed is determined to curb inflation even at the expense of economic growth.
In addition, the dollar is trading at 20-year highs this week, with the dollar index rising above the 114 level. Increased dollar value is putting pressure on oil prices, decreasing demand, as oil is priced in dollars.
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