Oil records its .largest weekly loss since March amid interest rate hike fears
Oil recorded its largest weekly decline since last March, with financial markets turmoil as a result of the possibility of raising interest rates, which overshadowed the supply deficit in the direct trading markets for crude, which pushed prices to a meteoric rise in the third quarter of the year.
The recent wave of selling in oil markets comes against the backdrop of increased concern about increasing interest rates again and the continuation of austerity monetary policy for a long period. At the same time, technical selling and algorithmic trading push prices into a full-fledged downturn.
West Texas Intermediate crude settled at approximately $83 per barrel, and has fallen by $8 this week alone. Prices of the commodity have now fallen to the lowest level since August, after losing all the gains resulting from the extension of production cuts by Saudi Arabia and Russia. Prices had risen by more than 30% amid the OPEC+ coalition's campaign that extended for several months to reduce supply in the markets.
Oil lost some of its gains this week after US government data showed a deterioration in gasoline consumption and an increase in stocks of motor fuel. The report sparked debate about whether the early price rise is destroying demand for the product, although banks, including Goldman Sachs and Barclays, say such fears are exaggerated.
“The recent correction in oil prices came too quickly and was largely unjustified in our view,” said Barclays analyst Amarpreet Singh. “The destruction of price-driven demand does not withstand the fact that the recent rise in oil prices has not been passed on to consumers.” "Except to a very small percentage."
Brent and WTI crude oil fell towards the oversold zone on the basis of the RSI, just one week after entering the overbought zone. The two benchmark products also quickly fell below the lower Bollinger band, another sign that the decline is exaggerated.
However, a decline in refining margin casts a shadow over the outlook. At one point this week, markets traded gasoline at about $8 above the price of crude oil, down by half from the previous two weeks. The price premium of diesel over crude oil fell to its lowest level since July, partly due to Russia lifting a ban on oil producers' exports.
Oil futures prices
West Texas Intermediate crude for November delivery rose 48 cents, settling at $82.79 a barrel in New York.
Brent crude for December settlement rose by 51 cents, settling at $84.58 per barrel.
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