China Weighing On The Mind Of Oil Investors
West Texas Crude traded around $71 per barrel in last week’s trade, the lowest level we’ve seen in roughly a year. Patrick DeHaan with GasBuddy said the economic uncertainty that has pushed oil prices lower for the past two-plus months continues to weigh on the minds of investors. He said while there’s a lot of news to digest, China remains the top issue, or concern, for many.
“Concerns over the Chinese economy as they shut down due to COVID, and even if they reopen, COVID cases likely to surge which is going to limit their oil consumption. China being the largest oil importer globally has a tremendous impact on overall price of oil. That combined with weakening demand in the U.S. as temperatures seasonably cool down. In addition, OPEC, they have continued to pump up plenty of crude oil given the situation electing not to cut production further at its December meeting.”
West Texas Crude traded slightly higher in Monday’s action, around $73 per barrel.
Will this downward trend for oil prices continue through the holidays and into the New Year? DeHaan said there are so many moving parts it's difficult to say. He added questions remain around China, around COVID, around Russia and Ukraine, and he noted, the health of the American economy.
"The Federal Reserve continues to raise interest rates and with the jobs reports looking better than expected and inflation numbers running higher than expected, it's likely that the Federal Reserve will likely have to continue raising interest rates, slowing down the U.S. economy. So certainly, a lot of high-level issues factoring into where fuel prices are going and the confluence of those factors is going to make it very challenging to predict when prices may break out of this this downward trend.”
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