Crude oil prices trade in negative territory for a third consecutive trading session in a row, with Brent and WTI prices falling as low as $83/b and $76.50/b respectively on Tuesday morning on growing worries for more supplies from Russia, and further interest rate hikes by major central banks ahead in the week.
Brent crude futures lost $1.20/b, or 1.50% to $83/b so far in the day, after falling by more than 2% on Monday, and adding from another dip by 2% last Friday when it was trading to as high as $88/b on optimism over Chinese reopening, and a softer dollar.
Russia oil exports at any price:
Both Brent and WTI crude oil prices lost over 2% on Monday following reports that Russian President Putin has allowed local energy companies to sell however many barrels at whatever price they can get in the market.
Why is bearish for the oil markets? Because Putin gave the green light to the oil companies to apply any discount necessary to sell their oil to any customer in the world, without setting any floor price for exports.
This event could create headaches within the OPEC group since the cartel declined its overall crude production by 2 million bpd last year to support the falling prices amid the fear of an economic recession.
Interest rate hikes ahead:
Adding pressure on the recent selloff, energy investors are worrying about the coming interest rate hikes from the three largest central banks in the world, which threatens to slow further global economic growth and weaken demand for petroleum products.
Federal Reserve is widely expected to hike interest rates by 25 basis points to 4.50% on Wednesday, Feb. 01, followed by a 50 basis points increase by the European Central Bank and the Bank of England to 3% and 4% respectively on Thursday, Feb. 02, to curb the 40-year record high inflation.
Taking support from the coming Fed’s rate hike, the DXY-U.S. dollar index which tracks the greenback against six major currencies, managed to bounce off from its 7-month low of 101.50 mark hit last week, to just over 102.50, adding extra pressure on the dollar-denominated crude oil prices.
