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New York gold futures broke through $3,350 an ounce, up 1.70% on the day.According to NHK, Japanese Economic Revitalization Minister Ryo Akasawa plans to visit the United States starting on April 30 to hold talks on tariffs.Toyota Motor Corp. announced it will invest an additional $88 million to produce the next generation of hybrid powertrains at its West Virginia plant.On April 24, European Central Bank Chief Economist Lane said on Wednesday that the recent reduction in the allocation of US dollar assets in the portfolio allocation may mean a shift from "overweight of US dollar assets" to a more natural allocation ratio, that is, a more balanced state between US dollar assets and assets in other currencies (including the euro). Lane said in a panel discussion at the Institute of International Finance (IIF) conference that since President Trump was elected last year, the "pricing of US assets has reflected perfect expectations." He added that the recent outflow of funds from US bonds may be seen as a reconfiguration that "will either stabilize or lead to deeper reflection." In any case, he said that in most portfolios, the weight of US dollar assets will still far exceed that of euro assets.On April 24, Politico reported, citing five people familiar with the matter, that the White House is discussing whether to lift sanctions on Russias Nord Stream 2 natural gas pipeline and other potential Russian assets in Europe as part of a discussion to end the Russian-Ukrainian conflict. The pipeline is a major Russian pipeline connecting its natural gas fields to Western Europe, and lifting the current sanctions on it would be a reversal of the U.S. policy for the first time during Trumps first term. President Biden abandoned these sanctions at the beginning of his term, but reimposed them after Russian President Vladimir Putin launched a special military operation against Ukraine in 2022. Restarting Nord Stream 2 could bring a windfall to Moscow, but only if the European Union agrees to buy Russian natural gas through the pipeline again - a prospect that seems unlikely given that the EU is working to get rid of its dependence on Russian energy imports. But lifting sanctions would be a "diplomatic coup" for Russia and a major concession by Trump.

Oil falls below $90 per barrel as rising interest rates dampen demand prospects

Haiden Holmes

Sep 22, 2022 11:39

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Oil prices extended falls on Thursday after the U.S. Federal Reserve struck a more hawkish tone than anticipated, heightening concerns that rising interest rates and inflation may weigh on demand for petroleum in the coming months.


As anticipated, the Fed raised interest rates by 75 basis points on Wednesday, causing crude oil prices to drop. The likelihood of a tighter monetary policy rattled the markets in response to Fed Chair Jerome Powell's declaration that more aggressive measures were required to contain inflation.


Powell claimed that the Federal Reserve is now willing to risk economic and labor market weakness to combat inflation. To battle excessive inflation, it is believed that other major central banks would raise interest rates, with the Bank of England preparing to act later today.


Brent oil futures traded in London slid 0.4% to $89.56 per barrel on Thursday, while U.S. West Texas Intermediate WTI crude futures declined 0.3% to $82.72 per barrel as of 20:39 ET (00:39 GMT).


It is projected that the combination of rising interest rates and growing inflation will have a negative effect on crude oil demand, hence retarding economic growth. In addition to reducing customers' purchasing power, high loan rates have a negative impact on fuel demand.


The dollar's strength, which touched a 20-year high on Thursday, has also impacted foreign crude demand this year by driving up import prices.


These fears have pulled oil prices below the annual highs hit at the commencement of the Russia-Ukraine war. In tandem with the White House's gradual withdrawal from the Strategic Petroleum Reserve this year, government efforts to decrease fuel prices have flooded the market with oil.


Notwithstanding, an escalation in the Russia-Ukraine war might further diminish Russian crude supply, foreshadowing a possible price hike. This week, President Vladimir Putin announced a partial mobilization of soldiers in order to "annex" portions of Ukraine.


Due to Russia's initial invasion of Ukraine, oil prices surged in February, as major European and Asian consumers relied heavily on Moscow for supplies. Due to supply limits, oil prices may climb, especially as the conflict escalates.


A harsh European winter is also expected to raise crude oil demand as more countries switch to heating oil.

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