Oil returns to pre-invasion levels
On Wednesday, the release of the U.S. Consumer Price Index (CPI) in June “reinforced the prospect of an aggressive hike by the Fed to slow the U.S. economy,” said Stephen Innes of Spi.
Prices soared again in June in the country, with inflation reaching 9.1% and climbing to the highest since November 1981.
A sharp rise that threatens growth, with consumption being the main driver of the U.S. economy.
For Tamas Varga, an analyst at PVM Energy, with a further rise in key rates, “the economy should contract” and growth gradually slow, “which will have an inevitable impact on oil demand”.
A rise in rates would also further support the dollar, which is already touching levels more seen in decades against the yen or the euro, thus weighing on the purchasing power of investors in the oil market who use other currencies.
On Thursday, the price of oil fell further, reaching for the first time levels more seen since Russia’s invasion of Ukraine.
Oil prices briefly fell more than 5% on Thursday, falling to levels more seen since before the war in Ukraine, swept away by recession fears that threaten demand for black gold, amid record inflation in the United States and the euro zone.