Outlook muted as higher interest rates put lid on demand for oil
Pump jacks working on the Permian Basin near Odessa. A Dallas Fed survey of executives from oil and gas companies put WTI for the current quarter down nearly $2 per barrel from the prior period.With the Dallas Fed pointing to expectations of lower crude oil prices, analysts said a major rally is unlikely over the short term given that central bank policies may throttle broader economic momentum.
“Summer is here and fears that central banks might need to deliver much more aggressive tightening that torpedo the global economy would prevent oil from mustering up any rallies,” he said. “For the U.S., good news will be bad news as that could trigger more tightening by the Fed.” Even with the recent turn south, crude oil prices have been range-bound since early May. Tom Kloza, the head of the Oil Price Information Service, said dueling winds continue to blow over the oil market. Higher interest rates are curbing demand, which is bearish, while most analysts expect oil supplies to tighten over the second half of the year, which is bullish.
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