Fajarasia.co – Oil prices fell two percent in early Asian trade on Thursday, extending losses from the previous day, as investors worried that aggressive US interest rate hikes could trigger a recession and dampen demand for fuel.
US West Texas Intermediate (WTI) crude futures fell 2.39 dollars, or 2.3 percent, to trade at 103.80 dollars a barrel at 0031 GMT. Brent crude futures sank 2.24 dollars, or 2.0 percent, to trade at 109.50 dollars a barrel.
Both benchmark oil prices fell around 3.0 percent on Wednesday (22/6/2022) to hit their lowest levels since mid-May.
Investors continue to rate how worried they are about central banks potentially pushing the world economy into recession, as they seek to curb inflation with rising interest rates.
“The oil market remains under pressure as investors worry that rising US interest rates will hamper the economic recovery and reduce fuel demand,” said Kazuhiko Saito, chief analyst at Fujitomi Securities Co Ltd.
“US and European hedge funds have sold their positions towards the end of the second quarter, which also cooled investor sentiment,” he said, predicting WTI could drop below $100 a barrel before the July 4 holiday in the United States.
The Federal Reserve is not trying to engineer a recession to stop inflation but is fully committed to controlling prices, even if doing so risks an economic downturn, US central bank chief Jerome Powell said Thursday.
US President Joe Biden, meanwhile, asked Congress to pass a three-month deferral of the federal gasoline tax to help combat record prices at gas stations and provide temporary relief to American families this summer.
“The news temporarily boosted oil product prices, but then it was seen that even if the gasoline tax was suspended, retail prices would remain high, making it difficult to stimulate demand,” said Fujitomi’s Saito.
The US Energy Information Administration said its weekly oil data, scheduled for release on Thursday, would be delayed due to system issues until at least next week.*****
