Oil prices slid on Thursday, amid global recession fears, with WTI falling to $104 per barrel. If the WTI price retreats, support can be found further down near $98 per barrel, while resistance can be found near the $121.2 per barrel level and higher up at $130 per barrel.
Reports that US President Joe Biden may move to suspend fuel taxes have also driven oil prices down, although the proposed federal tax cuts may not pass the Congresses’ approval.
Oil prices have tumbled to a four-week low, amid concerns that interest rate hikes could slow global economic growth, reducing energy demand. An increasing number of major Central Banks are moving towards a tighter fiscal policy to tame soaring inflation rates. Stalling economic growth, combined with fiscal tightening gives rise to fears of recession, pushing oil prices down.
Last week, the US Federal Reserve voted to raise its benchmark interest rate by 75 points and the BOE by 25 base points. Other major banks, such as the Bank of Switzerland and the Bank of Canada, are also raising their interest rates, halting the ascend of oil prices.
Tight oil supplies are supporting oil prices though, as many OPEC members continue to underperform, raising doubts on whether the organization can maintain its output goal. Geopolitical tensions also support oil prices, as tight supply raises fears of an energy crisis, especially in the EU.
The oil demand outlook has increased, as in the summer, there is increased traveling and driving, boosting oil demand. The zero-Covid lockdown in Shanghai has officially ended, increasing the demand outlook and boosting oil prices. It seems however that Covid restrictions are not over in China, creating uncertainty in oil demand. China is the largest importer of crude oil and Covid lockdowns have dampened oil demand, pushing prices down.
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