Oil Holds Gains as Investors Focus on Global Economic Outlook

Sep 22, 2022 by Bloomberg
image is BloomburgMedia_RIJZX9T1UM0Z01_22-09-2022_16-00-13_637994016000000000.jpg

The UMM BAB liquefied natural gas (LNG) tanker and the BW INTEGRITY floating storage regasification unit (FSRU) during the ship to ship operation at Fauji Oil Terminal & Distribution Co. Ltd. in Karachi, Pakistan, on Friday, June 24, 2022. This is the third time this month that Pakistan failed to complete an liquefied natural gas (LNG) tender for July, and the country’s inability to purchase fuel threatens to exacerbate electricity shortages just as hotter weather boosts air conditioning and power demand. Photographer: Asim Hafeez/Bloomberg

Oil clung to a slight gain in volatile trading after a slew of rate hikes around the world reaffirmed central bankers would continue to fight inflation at the expense of economic growth. 

West Texas Intermediate traded near $83 a barrel after earlier rising to almost $87. Oil’s tentative rally cooled as equity markets fell under the weight of multiple interest rate hikes from Norway to South Africa. Markets are largely following macroeconomic indicators after the Fed boosted rates by 75 basis points for a third straight time. 

“The post-Fed fallout and deteriorating global outlook is going to keep the oil market volatile, said Ed Moya, senior market analyst at Oanda. “The $82 level has been strong support for WTI crude this month, but that may get tested if global recession fears intensify.”

Thin liquidity has exacerbated price swings for oil, leading to wild volatility at times. Crude remains on track for its first quarterly decline in more than two years on concerns that demand may be crimped by an economic slowdown, but for most of September prices have been largely rangebound.


Data this week showed that signs of economic slowdown are mounting, as US gasoline and diesel demand fell to the lowest seasonal levels in more than a decade. The Energy Information Administration also reported nationwide US crude stockpiles and those at the key storage hub at Cushing, Oklahoma, expanded last week.

Traders are also watching bullish indicators for the coming months, including an escalation of Russia’s invasion to Ukraine, as well as upcoming EU sanctions on Russia. 

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By Ilena Peng , Yongchang Chin

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