On July 5, international crude oil prices suddenly plunged. WTI crude oil futures fell as low as 11.41%, and the price per barrel reached as low as US$97.50 per barrel. This was the first time that crude oil prices fell since May 11 this year. Breaking the $100 integer mark.
Why did international crude oil fall below the US$100 mark?
1. Expectations of U.S. dollar interest rate hikes
2. The situation of the Russia-Ukraine war is unclear
3. The new crown epidemic affects global economic recovery
Oil Needless to say, I don’t need to explain its importance. If you know more about oil, you will know its importance even more. Crude oil prices have been soaring in the first half of the year, but now the global economy is showing signs of recession. The demand for oil seems to be declining, and it is becoming increasingly obvious that prices have "collapsed."
The price of WTI crude oil fell "over 100" on Tuesday, falling 10% to $97.43 per barrel, and finally fell 8.2% to $99.50 per barrel. This is the oil price since May 11 The first drop below $100 was the lowest closing price for WTI crude oil futures since May.
At the same time, the price of Brent crude oil is not optimistic either, falling 9.5% to US$102.77 per barrel. You may not feel the downturn of this number, but you will know it by comparing it to a month ago. The price of Brent oil per barrel currently exceeds US$120.
Oil prices have fallen below $100. Everyone will be thinking, what is going on?
The epidemic is definitely one of the reasons. Everyone can imagine this. The epidemic has seriously affected the economy. Everyone has tightened their belts, oil demand has decreased, and prices have naturally fallen. This is easy to understand. According to relevant statistics, the global economic losses caused by the epidemic have exceeded 5 trillion US dollars, and more than 200 million job opportunities have been lost around the world.
The Federal Reserve raised interest rates by 75 basis points this time, the largest single rate increase in 30 years. The federal interest rate is also between 1.5% and 1.75%. No matter how you adjust it, the U.S. inflation rate is still very high, reaching 8.6% this month, while the Fed’s expectation is 2%, which is too far off.
For economic reasons, the Federal Reserve may continue to raise interest rates. Some predict that federal interest rates may reach 4%. If this is the case and the US dollar interest rate hikes will continue, then the international futures market will definitely be greatly affected, which will also cause the price of crude oil to fall.
To put it bluntly, the crude oil market is a financial market, and confidence is actually very important. The drop in international oil prices this time also illustrates a problem. Investors are not optimistic about this market for the time being. Many people at Citigroup in the United States know that U.S. financial oligarchs, group analysts said on July 5 that if the economic recession seriously affects market demand, Brent oil may fall to $65 per barrel by the end of this year, and may fall by the end of 2023. $45.
In fact, the decline in international oil prices this time was mainly due to the weaker economic trend, which led to weaker crude oil demand, which ultimately led to an increase in crude oil inventories, which led to a decline in oil prices.
The sharp drop in oil prices will definitely affect the price of domestic refined oil products. According to our country’s existing mechanism, the next round of domestic refined oil price adjustments will begin at 24:00 on July 12. Some professionals predict that if international oil prices continue to fall, domestic refined oil prices may fall for the third time this year.