Crude falls to three-month low amid volatile trading week

Crude prices fell to a three-month low in a volatile trading week, rocked by traders growing increasingly worried about an economic slowdown.

West Texas Intermediate fell on three of five trading days on the New York Mercantile Exchange, led by an $8.25 drop on Tuesday that sent prices falling below $100 a barrel for the first time since early April. Prices remained below $100 for the rest of the week, managing to add $1.81 on Friday to close at $97.59 a barrel. Prices fell 6.9% for the week, the second straight weekly drop. The listed price closed at $94.07, according to Plains All American.

Natural gas prices on the NYMEX rose on three of five trading days, starting with a jump of 39 cents on Monday and rising 52.6 cents on Wednesday. Prices added 41.6 cents on Friday, sending prices above $7 per Mcf. The price ended the week at $7.016 per Mcf.

“I think it’s the high inflation numbers that are worrying the oil markets,” Bruce Bullock, director of the Maguire Energy Institute at SMU Cox School of Business, told The Reporter-Telegram via email. “With the CPI and PPI at 40-year highs, the oil market is now convinced of another significant rate hike by the Federal Reserve – from ¾ to a full percentage point in order to slow the This greatly increases the risk of a possible recession and a drop in demand for oil.

Writing in his daily bulletin, Edward Moya, senior market analyst, The Americas at Oanda, credited an impressive retail sales report Friday for the rise in crude prices, saying the sales report illustrated the strength of the American economy. He added that it seems likely that President Biden’s trip to the Middle East this week will not lead to an increase in oil supplies.

“The oil market was down earlier in the week on fears of demand destruction, so (today’s) retail sales report and consumer sentiment data from the University Michigan helped undo some of that,” Moya wrote.

Looking ahead, he said a big question mark for oil prices is how weaker economic data from China and possibly an improving COVID situation will sustain their oil demand outlook. raw.

The resumption of Libyan production further complicates the oil outlook, he added. Bloomberg reported on Friday that Libya, a member of the Organization of the Petroleum Exporting Countries, is restarting oil exports and production from all of its fields after reaching an agreement with protesters, ending a months-long blockade that had cut its production in half.

Wrote Moya, “There are still a lot of moving parts in determining what will lead to the next big move in oil, but at the moment it looks like this market is too tight to break below the $90 level.”

Garland K. Long