Oil prices fell heavily on Friday

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.

Share this news :

You might also read :

January 28, 2022

The backwardation continued to narrow

European gas prices were almost stable on the spot and the two front months yesterday as ongoing strong LNG sendouts and profit taking continued to…
November 2, 2021

Pressure on OPEC+

Whether its market prices or threats from oil-consuming countries, OPEC+ is warmly invited to increase production by more than the 0.4 mb/d monthly hike planned for December.…
Join EnergyScan

Get more analysis and data with our Premium subscription

Ask for a free trial here

Don’t have an account yet?