Crude oil prices decreased on Monday, hovering over multi-month lows as concerns about weakening demand continued to weigh on commodity markets.
The US West Texas Intermediate futures slashed 0.94% to $88.16 per barrel, trailing a 9.70% fall last week. Eventually, the Brent crude contracts slumped 0.91% to $93.96 per barrel. The international benchmark also tumbled 13.70% in the previous week. This move pointed to the largest weekly drop since April 2020.
Accordingly, last week’s price action indicated that recession-driven demand concerns have the upper hand over supply fears.
On Friday, the United States economy added 528,000 jobs in July, exceeding market expectations. Eventually, the unemployment rate ticked lower to a pre-pandemic low of 3.50%. However, analysts explained that the sterling report would further cloud the outlook for crude demand amid recession fears.
The robust job growth will further heighten the case for the Federal Reserve to continue on its path of outsized interest rate hikes. Investors priced in another 75 basis point hike for the upcoming Fed’s September meeting after a similar-sized lift last month.
Recently, the Energy Information Administration cited that American crude inventories unexpectedly rose in the final week of July.
Correspondingly, financial services firm ANZ revised its oil demand forecasts for 2022 and 2023 by 300,000 bpd and 500,000 bpd, respectively. Therefore, this year’s outlook posted a rise of 1.80 million bpd year-over-year, settling at 99.70 million bpd.
What to expect in the crude market?
Crude prices have had a roller-coaster ride in 2022. It significantly surged in the opening months following Russia’s invasion of Ukraine. Then, it sank from June as global slowdown fears gathered pace.
This week, market participants kept an eye close to a deluge of market commentary. Specifically, the EIA will issue its short-term outlook on Tuesday. Then, there would be monthly snapshots from OPEC and the International Energy Agency on Thursday.
Moreover, traders look forward to a swathe of key inflation data from the United States, China, and the Eurozone. Higher-than-expected readings could fuel more jitters over increased monetary tightening that could drag crude prices.