Crude Oil Prices Fall as Resistance Builds for Global Growth

Crude oil

Crude oil is lower today, Monday 12th September 2022, as the US price cap plan is forging ahead and concerns about global growth persist amid rising rates.

The US Treasury issued indicative guidelines on the modus operandi of the proposed cap on Friday. However, there are still several unanswered questions on how it operates.

Fed’s James Bullard, Esther George, and Christopher Waller reiterated the central bank’s hawkish stance. The market is looking to soften consumer spending conditions and Covid-19-related lockdowns in China to boost growth and demand for oil.

Markets are yet to completely understand the implications of Ukrainian forces pushing Russian troops back. Currently, The WTI futures contract is about US$ 85.50 bbl, and the Brent contract is close to US$ 91.50 bbl.

The US Dollar had a mixed start to the week, losing ground to the Euro but gaining against the Japanese Yen again. This saw EUR/JPY push toward Friday’s 8-year peak above 144.

The Euro seems to have found support in the hawkish comments made by Bundesbank President and member of the ECB Governing Council, Joachim Nagel, on German radio during the weekend. He hinted that there might be more outsized hikes from the European Central Bank (ECB).

The Yen weakened despite increased jawboning from Japanese officials. Deputy Chief Cabinet Secretary Seiji Kihara’s cited the one-sided moves in the currency that are being monitored.

Japan relaxed travel rules for inbound tourists that would benefit from the weaker Yen and boost economic activity. Treasury yields have added a few basis points across the curve in Asian trade. Gold stays steady near US$ 1,713 an ounce.

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