Oil Extends Drop as Hawkish Powell Spurs Flight From Risk Assets
Track the latest on oil prices here.
(Bloomberg) -- Oil extended declines after Federal Reserve Chair Jerome Powell signaled interest rates could rise higher and faster than previously anticipated, fueling concerns about the economy and energy demand.
West Texas Intermediate futures slid below $77 a barrel after posting the biggest one-day drop since early January. Powell’s remarks, made during a testimony before Congress, opened the door to a half-point rate increase at this month’s meeting and weighed on equity markets earlier Wednesday.
Adding to the bearishness, OPEC Secretary-General Haitham Al-Ghais said that slowing oil consumption in Europe and the US poses a concern, even as Asia experiences “phenomenal” growth. Citigroup Inc. said global supply is ample and demand remains low.
Before the Powell-driven selloff, oil had been trading at the highest level since late January. Prices also eased after China this week set a cautious economic growth target for 2023, denting optimism about a major revival in demand from the world’s biggest oil importer.
“The most inverted US yield curve in decades now signals an even bigger risk of a recession and, with that, weakening demand for fuel,” said Ole Hansen, head of commodities strategy at Saxo Bank. “Overall, I see crude oil thoroughly stuck with no clear direction for months now.”
Elements, Bloomberg’s daily energy and commodities newsletter, is now available. Sign up here.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.