‘R’-Word Rules Like US Crude Oil Below $80 for Worst Week in 7 By Investing.com

© Reuters.

By Barani Krishnan

Investing.com – The most hated buzzword by oil buyers is back.

The recession, or the “R” word as it became known, was overwhelming in commodity markets on Friday, sending gold to its lowest levels in two and a half years as ‘black gold’, or oil, prepared for its worst weekly loss in seven as crude broke through. The US dollar fell below $80 a barrel for the first time since January.

Global stocks at two-year lows, 20-year highs, weak European PMIs and growth concerns over this week’s interest rate increases by the market made it a perfect storm for oil price bulls.

“The market is clearly thinking about the economic slowdown,” said Scott Shelton, energy futures broker at ICAP in Durham, North Carolina.

“Whether it’s physical or not [oil] Shelton added, referring to the warnings of long-leaning analysts that the risk of an escalation of the war in Ukraine by Russia and China from the COVID lockdown could mean a lot of upside for oil in the coming weeks.

New York, which acts as a benchmark for US crude, settled at $78.74 a barrel, down $4.75, or 5.7%, on the day. The so-called WTI earlier recorded a session low of $78.14.

Over the course of the week, the US benchmark fell 7.5% in its worst week since the end of July.

Referring to the SMA for US crude, Sunil Kumar Dixit, chief technical strategist at SKCharting.com said, “WTI is approaching the 100-week SMA at $77.50 with today’s low at $78.14. “. “Some additional decline behind support is not ruled out.”

The global benchmark for oil traded in London settled at $86.15, down $4.31 or 4.8% on the day, after an intraday decline to $85.51.

Over the course of the week, Brent fell 5.7 percent, its largest weekly decline since the end of August.

“Central banks now seem to accept that stagnation is the price to pay to control inflation, which could affect demand next year,” said Craig Erlam, an analyst at online trading platform OANDA.

“At the same time, the market remains tight and OPEC+ is fully prepared to constrain supplies further even as it fails to meet its self-set quotas so far. What’s more, the US-Iran nuclear deal does not look any closer and Russia’s mobilization may pose a threat to its supply “.

Given all of these things, Erlam added, “maybe very little is priced at this point.”

The European Union on Thursday stepped up its plans to cap the price of Russian oil – a measure aimed at weakening Moscow’s ability to finance the war in Ukraine.

Meanwhile, Nigerian Oil Minister Timber Marilyn Silva, speaking on behalf of the OPEC+ alliance, threatened to cut global crude production if prices continued to fall.

Neither announcement had a significant impact on the market.

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