Oil Holds Gains as Investors Focus on Global Economic Outlook

(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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