Oil drops as hawkish Powell testimony amplifies recession fears
BNN Bloomberg
Oil dropped alongside broader markets as U.S. Federal Reserve Chair Jerome Powell’s testimony before a House committee heightened concerns of an impending recession.
West Texas Intermediate dropped to near US$104 a barrel, with prices having shed more than 10 per cent in the last week. Powell said his commitment to fight inflation is “unconditional.” Warnings about a potential recession and economic slowdown have overshadowed oil market fundamentals that indicate a growing supply crunch. Crude’s recent swings have been too volatile for many traders. Open interest across the main futures contracts has fallen to the lowest since 2015 in recent days.
“Future demand destruction from a possible looming recession is countering near-term real demand that remains very strong,” said Dennis Kissler, senior vice president of trading at BOK Financial. “As long as the fear of a recession remains, the near-term strong demand is keeping crude choppy.”
Updated statistics on the state of US inventories won’t be released this week. The Energy Information Administration’s stockpile report is delayed after a power disruption damaged some of the agency’s hardware.
