Rates continue to drag oil price

Oil prices slid on Wednesday. ICE Brent front month price went -2.5% down to settle at $111.74/b. And, NYMEX WTI closed at $106.19/b making a -3.2% decline.

Again, it is the risk of an economic slowdown in the coming months (due to the monetary tightening in developed countries and the strong inflation) that pushed oil down. The focus is not only on last week hikes, but market players are also expecting US Federal Reserve to raise rates by another 75bp in July and 50bp in September.

President Biden asked Congress to suspend the federal tax on gasoline for three months and called states to do the same thing on state taxes. The level of these state taxes on gasoline is ¢38.69/gal on average. However, this pause, and the result of lower gasoline prices could also boost gasoline demand and push prices up.

The API figures showed that crude inventory rose by 5.6mb and gasoline inventory by 1.2mb. The EIA is facing technical issues and the release of the weekly inventory report is delayed until next week.

For the moment oil is moving down: ICE Brent trades -1.2% lower.