Demand for oil decreases and so does its price
According to analysts and commodity market financial strategists, on Tuesday morning of 10 January 2023 oil prices continued to decrease slightly. It is expected that a further interest rate hike might take place in the United States (US) during the upcoming US Federal Reserve System’s (Fed) Federal Open Market Committee (FOMC) meeting. As the world’s largest oil consumer, there are fears that it will slow economic growth and demand for fuel will decrease.
It is precisely this fear of decreased demand for fuels and oil in general that is currently continuing to lower the price of oil on the global commodity market. On 10 January 2023, at 11:18 am CET, the American light crude oil West Texas Intermediate (WTI) traded on the New York Mercantile Exchange (NYMEX) commodity market at US$ 74.74 per barrel with a daily growth of +0.15% so far. However, this price represents a price loss of -7.17% in the first six days of trading of 2023. In the overall annual assessment of the WTI crude oil price, this current price represents an annual increase of +5.52% over the last 52 weeks.
At the time mentioned the European counterpart of WTI oil, i.e. North Sea Brent crude oil, traded on the Intercontinental Exchange Europe (ICE) commodity market at US$ 79.54 per barrel, with a daily decrease of -0.14% so far. According to technical analysis data, Brent crude oil has shown a price decrease of -7.51% since the beginning of this year. Overall, in annual terms, the price of Brent crude oil has shown a price increase of +7.02% over the last 52 weeks. At the same time, according to the US Dollar Currency Index (DXY), we saw the USD at a price level of 103.21 with a daily gain of +0.2%.
According to analysts, the decrease in demand for oil is very closely related to the rising cost of living in connection not only with inflation, but also in connection with the cost of debt money because the current level of interest rates in the United States is a record. This week, two US Federal Reserve officials expect the Fed’s benchmark interest rate – now at 4.25% to 4.5% – to increase to 5% to 5.25% to keep higher inflation under control. Fed policymakers said new inflation data to be released later this week, will help them decide whether they can slow the pace of rate hikes to just a quarter point at their upcoming meeting.