By Barani Krishnan
Investing.com – It’s back, the most hated watchword for oil longs.
The recession, or the ‘R’ word as it has come to be known, was omnipotent in commodity markets on Friday, sending it to 2 1/2 year lows as it set ‘black gold’, or oil, to its worst weekly loss in seven as US crude broke below $80 a barrel for the first time since January.
Global equities at a two-year low, the 20-year high, weak European purchasing managers’ indexes and concerns about this week’s rising rate hikes by the year made the perfect storm for the oil bulls.
“The market is clearly thinking about an economic slowdown,” said Scott Shelton, an energy futures broker at ICAP in Durham, North Carolina.
“If the physical degrees [de petróleo] whether or not they are strong or weak issues, not currently,” Shelton added, referring to warnings from long-standing analysts that the risk of Russia’s escalation of war in Ukraine and China’s opening up of Covid lockdowns could mean many more. advantages for oil in the coming weeks.
, traded in New York, which serves as a benchmark for US crude, was down 5.25% to $79.12 a barrel at 2:04 pm ET. The earlier fell to a session low of $78.14.
“WTI is approaching the 100-week SMA of $77.50 with today’s low of $78.22,” said Sunil Kumar Dixit, chief technical strategist at SKCharting.com, referring to the moving average. crude oil from the US. “Some further dips beyond support are not ruled out.”
The global benchmark for London-traded crude fell 4.18% to $86.28 from its intraday low of $85.51.
For the week, Brent was also down about 5%, heading for its worst week since late August.
“Central banks now seem to accept that a recession is the price to pay to rein in inflation, which could weigh on demand next year,” said Craig Erlam, an analyst at online trading platform OANDA.
“At the same time, the market still remains tight and OPEC+ is perfectly willing to tighten supply even further, even if it doesn’t meet the quotas it has set so far. Also, a US-Iran nuclear deal doesn’t look any closer. and Russia’s mobilization could pose a risk to its supply.”
All things considered, “very little is likely to be priced in at this point,” Erlam added.
The European Union on Thursday stepped up its plans to cap the price of Russian oil – a move aimed at weakening Moscow’s ability to finance the war in Ukraine.
Meanwhile, Nigeria’s Oil Minister Timipre Marlin Sylva, speaking on behalf of the OPEC+ producer alliance, threatened a cut in global oil production if prices continued to fall.
Neither of the two ads had a big impact on the market.