Well, well, well, it looks like oil prices have hit the skids again, dropping to approximately $76.75. Why, you ask? Oh, just because everyone’s freaking out about a global economic slowdown. And as if that weren’t enough, Western central banks are getting trigger-happy with the interest rate hikes to try and tame the galloping inflation. Mixed global PMIs haven’t exactly helped, either – analysts are revising their oil demand estimates downwards faster than a speeding bullet!
It’s not just any old oil, folks – we’re talking West Texas Intermediate (WTI) futures on NYMEX, which have taken a steep nosedive below $77.00 in the early European session. Talk about feeling the pressure! Those mixed global Purchasing Managers Index (PMI) numbers and accelerating fears of more interest rate hikes from the Western central banks have got everyone quaking in their boots.
The recent recovery in the US Dollar Index (DXY) hasn’t helped matters much either. The USD Index has made a comeback, reaching near 101.85 after upbeat preliminary United States S&P PMI figures raised expectations of a consecutive 25 basis points (bps) interest rate hike from the Federal Reserve (Fed). Woohoo, party time!
But hold your horses, because Friday’s global PMI data showed that the US economy is recovering like a boss – figures beat estimates by a country mile! Unfortunately, Manufacturing PMIs for the shared continent and the United Kingdom weren’t quite as impressive, and that’s got everyone worried about a potential decline in oil’s forward demand. Despite the slowdown fears, the central banks of the respective economies are sticking to their guns and planning to raise interest rates even higher to combat stubborn inflation. It’s a race to the top, baby!
The Bank of England (BoE) is expected to up the ante with another 25 bps interest rate hike, bringing rates up to a whopping 4.5%. Meanwhile, the European Central Bank (ECB) is hot on their heels, with plans to push rates up to 3.75%. These moves could have a further impact on the forecasted demand for oil, but hey, let’s live a little and enjoy the ride, shall we?
Now that you’re up to speed on the latest news regarding oil prices, global PMIs, interest rate hikes, WTI, central banks, inflation, and the US Dollar Index (DXY), why not check out some of our other fantastic blog posts? We’ve got tons of great content that covers all sorts of topics related to finance, economics, and investing. So go ahead, click around, and see what catches your eye – who knows, you might just learn something new!