Oil extends losses near US$118 as global market selloff deepens
BNN Bloomberg
Oil extended losses for a third session as the prospect of further monetary tightening to combat surging U.S. inflation sent global markets spiraling lower.
West Texas Intermediate futures fell about two per cent to trade below US$118 a barrel. US inflation accelerated to a fresh 40-year high last month and traders are now betting the Federal Reserve will raise rates by three quarters of a percentage point at least once in its next three meetings. China is starting to re-impose virus curbs as cases rise, just weeks after major easing in key cities such as Shanghai.
Still, oil is up almost 60 per cent this year as rebounding economic demand coincided with a tightening market following Russia’s invasion of Ukraine. The war has fanned inflation, driving up the cost of everything from food to fuels and some analysts are calling it the most bullish market they’ve ever seen.
Even faced with US economic slowdown, fundamentals for a tight crude market remain, said Pavel Molchanov, an analyst at Raymond James & Associates Inc. “When markets are worried about macroeconomic conditions equities take a lot of the hit” but oil prices have still shown to be “incredibly resilient,” said Molchanov.
