2023-05-05 21:02:36
A violent shock to the oil markets in the current period, which is facing the longest series of weekly losses since the beginning of the current year 2023, which analysts attribute to a number of fundamental factors; Finally, among them are the number of challenges that the US economy is witnessing, especially with regard to the violent turmoil in the banking sector since last March, which pushes investors to avoid risks.
In addition, the US Federal Reserve’s policy of raising interest rates continues, which is clearly reflected in oil prices, in parallel with the deep concern that the markets have regarding the specter of recession threatening the US economy, which directly affects the demand for oil, in addition to On other factors, including the contraction of manufacturing activities in China.
– US Nymex crude is still down by regarding 9 percent this week, following a four-day decline.
– Brent crude also fell, regarding 8 percent during the week.
– Despite the relatively high prices, in Asian trading on Friday, oil is heading towards recording a third consecutive weekly decline.
– The decline in prices came despite signs of strength in the actual oil market, which indicates that sales in the market were too excessive.
US Federal Trends
Gerard Caprio, professor of economics at Williams College, says in exclusive statements to “Economy Sky News Arabia” that most observers of the US Federal Reserve believe that it will temporarily stop raising interest rates.
He justifies this by saying that failures and mergers in the banking sector are likely to lead to a decrease in lending and a slowdown in the economy, in addition to the slowdown caused by high interest rates.
But even stopping at current levels leaves a number of banks with assets that generate lower rates of return, and therefore such banks will only be saved through a significant drop in interest rates, while the Federal Reserve continues to indicate that it intends to return inflation to its target. adult 2 percent.
This comes at a time when a state of uncertainty is still imposing itself on the banking sector in the United States of America, amid fears of an expansion of the “domino effect” on small and medium banks, and following the series of stumbling that began last March, from Silicon Valley to the First Republic Bank, which It was recently acquired by JP Morgan, passing through Signature Bank, while the list goes on to include other banks that face many similar risks, including Bac West Bank, which recently announced that it is studying strategic options, including selling.
These factors interact to greatly affect oil prices, amid expectations that prices will return to their levels following the crisis is contained, which was previously expressed by the Russian Deputy Prime Minister, Alexander Novak, who attributed the decline in global oil prices to the banking crisis in the United States, expecting its return. to their previous levels in the foreseeable future following containing this crisis, according to the Russian agency Sputnik.
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