Brent Oil Drops Amid Concerns Of Economic Slowdown
Brent Crude Oil prices dropped on Wednesday despite the supply cuts announced by countries like Saudi Arabia & Russia. The reason behind this drop can be attributed to the economic slowdown around the world, which is hurting the market's sentiment.
Brent oil was last seen trading at a 0.6% loss which is equivalent to 46 cents. When checked last time, the price of one barrel of Brent crude oil was $75.79, which is still higher than the prices of the last few years.
On the other hand, the US WTI crude futures were even trading much lower than the Brent crude oil. The price of WTI crude futures was last seen at $70.86 per barrel after gaining a 1.5% upside.
So based on these two oil benchmark indexes, the WTI was marginally up while the Brent oil was marginally down, which makes things even more confusing.
Oil prices Remain Under Pressure
For the most part, the prices of oil remain under pressure as more rate hikes are on the way in Europe and the USA. In addition, the global economy has also slowed down due to the fight against inflation, which is now also hurting the oil demand.
Based on these market conditions, a back-and-forth movement in oil prices is highly likely. Furthermore, the focus will be on the policies of central banks and the economic indicators from China which remains a major oil-consuming market. That's why some analysts are also forecasting Brent crude oil prices to trade near $75 per barrel.
A recent survey from China has also shown a slowdown in the services sector along with the manufacturing sector. So that's yet another factor that is keeping the oil prices under pressure.
Looking ahead, the market will be looking for cues in the FOMC meeting minutes along with the upcoming FOMC meeting.
It appears that the production cuts announced recently only lifted the market temporarily. Now that the reality is kicking in, it appears that oil prices may state a further decline.