2023-06-27 19:43:23
Oil prices fell significantly on Tuesday, in a market reassured by the agreement that ended the mutiny in Russia, and once more concerned regarding a possible strangulation of the world economy by Western central banks.
The price of a barrel of Brent North Sea oil for August delivery closed down 2.58% to $72.26.
As for the barrel of American West Texas Intermediate (WTI) of the same maturity, it yielded 2.40% to 67.70 dollars.
After a timorous rise on Monday, prices fell on Tuesday as signs of de-escalation multiplied following the mutiny on Friday by the paramilitary group Wagner, whose leader, Evgeny Prigojine, threatened to invade Moscow.
“A civil war in one of the world’s biggest oil producers would have been a pretty worrying situation,” commented John Kilduff of Again Capital, “so this resolution put downward pressure on prices.”
With the Russian dossier dismissed, the operators have remobilized their attention to the subject which concerned them at the end of last week, namely the offensive discourse of Western central banks, which ensure that they have not finished with their monetary tightening.
The specter of a new round of rate hikes “is particularly present in the United States, given the solid economic data that we had this morning”, underlined John Kilduff.
Orders for durable goods thus increased by 1.7% over one month, while economists expected a contraction (-0.9%), while sales of new homes jumped 12% over one month in May. .
“That means the Fed (US central bank) is going to have to keep rates higher for longer to cool the economy as much as it wants,” said Bill Adams of Comerica Bank.
To top it off, consumer confidence, measured by the independent institute The Conference Board, soared to 109.7 in June, its highest level since January 2022, just before the invasion of Ukraine by Russia.
Concerns regarding the effect of monetary policies on the global economy “should not dissipate any time soon”, anticipates Thu Lan Nguyen, of Commerzbank.
Traders shrugged off statements by Chinese Premier Li Qiang that the government was “hopeful it might achieve” its growth target of 5% for 2023.
“Just because you want to see something happen doesn’t mean it’s going to happen,” said John Kilduff.
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