Oil slumped on Friday: ICE Brent front month dove by 5.6%, to settle at $113.12/b and NYMEX WTI plunged by 6.8% to reach its lowest closing price since May 12, at $109.56/b.
The sell-off was not driven by a new event, but is rather the result of the degradation of the economic outlook caused by the Fed’s decision (followed by the Bank of England and the Swiss National Bank) to strongly raise rates to tame inflation by slowing the economic activity.
Another factor was the strengthening of the USD, which is at the highest level since 2002 pushing oil down. Indeed, oil trading is made in USD and is thus more expensive when the US dollar is stronger.Finally, there is no US trading today (it is Juneteenth) so traders may have decided to adjust positions on Friday.
On the side of weekly reports, the number of active rigs in the US climbed by four last week, and the open interest on NYMEX WTI is at the lowest level for six years, showing that investors a shunning away from risky assets (like oil) to invest on safer products.
This Monday morning, oil is slightly up, ICE Brent trades +0.5% higher.
Get more analysis and data with our Premium subscription
Ask for a free trial here
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.