Prior to important US inflation data, oil prices decline
As investors anxiously await important US inflation data scheduled for release later this week, the oil price fell on Monday. Russia has announced a reduction in supplies, but concerns about a recession in the world economy and a sluggish recovery in China persist.
Russian Supply Cut Has a Major Price Tag
The majority of last week’s improvements in crude oil prices came on Friday, when Russia announced it would cut its production by 500,000 barrels per day in response to western price controls brought on by the ongoing crisis in Ukraine. Analysts have said that the market has already factored in this price decrease and that owing to stringent western sanctions on Russia’s oil exports, it may be difficult for the country to find clients.
Economy-Related Uncertainty Impacts Oil Prices
This week, oil prices have been negatively impacted by the ambiguity around a potential global economic downturn. The US inflation data, which is now the focus of traders’ attention, is predicted to show a little decline from the previous month but still stay high. This would prompt the Federal Reserve to raise interest rates more often, which might impede economic development and reduce oil consumption later in the year.
Increased US Dollar Pressures Crude Markets
In anticipation of the inflation figure, the US dollar’s rise is also exerting pressure on crude markets by driving up the price of oil for global consumers. Concerns over China’s economic recovery continue despite some relaxing of anti-COVID measures in that country, since recent GDP assessments have been contradictory. It’s yet unclear when such a recovery will occur.