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OIL ON THE BUMPY RIDE DOWN THE HILL

Harvest Global Markets :

Crude oil, one of the most favorite products of investors, has been on a down roll due to increasing recession fears. WTI Crude Oil peaked at a high of $130.50 per barrel on March 7th, 2020, after Russian-Ukraine Invasion. Nevertheless, bullish circumstances for oil have taken a back seat, and reverse gear has been seen since the last week. WTI Crude Oil touched a low of $81.20 per barrel, i.e., dropping by 37.7%.

Several factors have played their part in the crude oil market’s trend reversal. Firstly, the globe has been severely lashed by record-breaking inflation due to energy product supply constraints; consequently, central banks have adopted a bumpy ride towards aggressive interest rate hikes, leading to economic contractions and demand drops. U.S crude oil inventories recorded a surplus of 8.8 million barrels as opposed to a negative forecast of 2.0 million barrels on the week ending September 8th,2022. Furthermore, U.S crude oil exports have also slumped from 3.9 million barrels per day to 3.4 million barrels per day.

Secondly, the great seven economies of the world (U.S, U.K, Germany, Japan, Canada, France, and Italy) have planned to impose price caps on energy products imported from Russia, but Russia threatens to move their supplies to Asian countries if such a scenario happened, which could further lower the crude oil prices.

Thirdly, another fierce monetary policy from Federal Bank on September 21st, Wednesday can boom the Dollar-Index again, which may put more downward pressure on crude oil.

Investors are eagerly scrutinizing the volatile journey of crude oil to book their profits.

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