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The cost of WTI crude oil decreased by $3.02, reaching a settlement amount of $69.51, as the oil industry factored in the possibility of another recession. This occurrence was attributed to an increase in central bank interest rates and varying reports on US inventory.
Selling of oil commenced right after the opening of oil futures due to the product buildup reflected by API data. Although the EIA data was marginally better, it was insufficient to halt the declining momentum. Consequently, the bulls gave up, which ultimately resulted in an additional $1 of selling, leading to a decline in the day’s overall value.
During the busiest two months of the US driving season, the oil market optimists will be eager to witness more evident signals of demand.
During the month of July, Saudi Arabia plans to reduce its production by an extra 1 million barrels per day, while the sale of US Strategic Petroleum Reserve (SPR) will come to an end. This move is expected to create a tighter market, but the impact of it has already been accounted for in the current market price of $65. Therefore, a significant unexpected event would be needed to cause the price of oil to move away from this level.
Although oil and natural gas have both fallen by 4%, the Canadian dollar remains stable and close to its 9-month peak in the FX market.
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