Thursday, March 30, 2023

Texas oil loses 1.2% and closes at US$76.66

The price of Texas intermediate oil (WTI) fell 1.2% this Wednesday and closed at US$76.66 a barrel, still affected by the fears raised by the words of the president of the Federal Reserve (FED), Jerome Powell, who advanced on Tuesday that interest rates will continue to rise to appease inflation.

At the close of business in New York, a barrel of WTI for April delivery lost US$0.92 from the previous day’s close.

The price of benchmark crude oil in the United States, which rose 4% last week encouraged by China’s recovery after the draconian security measures against the spread of covid-19, fell 3.6% on Tuesday in reaction to the words of Powell.

“Crude prices cannot get rid of the fear that the Federal Reserve will send the US economy into a serious recession,” said Oanda analyst Ed Moya on Wednesday, who acknowledged that, in the short term, the tension between supply and demand keeps prices high.

The Energy Information Agency (EIA) announced today that crude oil inventories fell by 1.7 million barrels last week, gasoline inventories fell by 1.1 million and distillates by 500,000 barrels. .

However, these data, better than expected, did not serve as a counterbalance to the nervousness aroused by the statements by the president of the central bank.

Powell assured a Senate committee yesterday that the central bank is ready to accelerate rate hikes if the economic data justify it.

The latest economic data “have been stronger than expected”, which suggests that “the final level of interest rates is likely to be higher than previously anticipated”, he explained, before insisting that recovering the stability of prices will require maintaining “a restrictive stance of monetary policy for some time,” insisted the president of the regulator.

In order to reduce inflation, the Fed has carried out a series of rate hikes, eight in the last year. The last one occurred on February 1 and was less than the previous ones, 0.25 points.

With this increase, rates remain in a range of 4.5% and 4.75%, the highest figure since September 2007.

On the other hand, April natural gas futures contracts fell US$0.13 to US$2.55, and gasoline futures due the same month fell US$0.01 to US$2.68.


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