Crude prices gain from two-week lows ahead of US inflation data
US Crude prices rose above $100 per barrel a day after falling below that level and for the first time in May as investors’ risk appetite regained some pace broadly on Wednesday.
NYMEX crude oil futures rose 2.5 per cent to around $102.3 a barrel, having fallen below $100 on Tuesday for the first time this month. The international Brent crude rose about 2.7 per cent to $105.
US crude futures dipped below $100 a barrel to their lowest level in two weeks. The demand outlook was clouded by coronavirus lockdowns in China and growing recession concerns, while a strong dollar made crude more expensive for buyers using other currencies.
“It’s a risk recalibration. There’s no other catalyst, other than it’s gone too far, too fast,” George Goncalves, head of US macro strategy at MUFG Securities told Reuters, referring to yields. “Maybe we’re going to get a period of inflation that won’t be just heading higher unabatedly.”
Markets have been volatile across asset classes due to surging inflation and fears that monetary tightening aimed at slowing price increases would cause a slowdown in global economic growth.
Oil prices fell in volatile trade this week, see-sawing between supply concerns from impending European Union sanctions on Russian oil and demand worries related to coronavirus lockdowns in China, a strong dollar and growing recession risks.
US crude recently fell 3.35 per cent to $99.64 per barrel, and Brent was at $102.26, down 3.47 per cent on the day.
Last week, central banks in the United States, Britain, India (after an emergency meeting) and Australia raised interest rates, and investors girded for more tightening as policymakers fought soaring inflation.
“It’s the calm before inflation data tomorrow, so this allows a breather for risky assets,” Joe Manimbo, senior market analyst at Western Union Business Solutions, told Reuters.
He added that trader positioning was “working in favour of risk assets.”
