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RSM Chief Economist Joseph Brusueras: Warsh delivered the right hawkish signals at the press conference and attempted to reinforce the Fed’s credibility in restoring price stability, while also enhancing his own credibility.U.S. stocks continued to decline after the Walsh press conference, with the S&P 500 falling 1%, its biggest drop since July 29, the Dow Jones Industrial Average down 1.65%, and the Nasdaq Composite down 0.6%.On September 17th, Federal Reserve Chairman Warsh declined to answer questions at a press conference regarding his interactions with US President Trump. Trump has been calling for lower interest rates in recent months. Warsh stated, "I have no comment on my discussions with the president." White House Council of Economic Advisers Chairman Christopher Phelan said on Tuesday that raising interest rates would be a "mistake."On September 17th, Federal Reserve Chairman Warsh stated that he would not disclose details of future interest rate decisions by the Federal Open Market Committee (FOMC). He said, "I am not responsible for providing forward guidance. Our decision today (to raise interest rates) is a carefully considered, serious, and responsible one. We have been preparing for and thinking about this decision for the past 110 or 120 days." Warsh also stated that this decision was not market-driven. He said, "Our decision today is based on our assessment of the current situation, our judgment of the employment trend, and our assessment of the strength of the economy. Sometimes, the market tries to anticipate our decisions. I watch market prices to see what information the market is sending. But todays decision is our own."On September 17th, Warsh stated that while the Federal Reserve cannot prevent price shocks in commodities such as oil on its own, the central bank can use policy tools to prevent further spread of inflationary pressures. Warsh said, "We cannot influence the price of any single commodity, such as oil or groceries." However, he pointed out, "We can and will ensure that any changes in relative prices do not spread further, and do not have second- or third-order effects on the economy. Thats our responsibility, and thats what were doing." Warsh made these remarks as U.S. diesel prices hit a record high due to the Iran war.

Oil prices are poised for a weekly boost as recession fears subside

Skylar Williams

Aug 12, 2022 11:12

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OPEC and the International Energy Agency (IEA) held differing views on the demand outlook, which dragged on oil prices during Friday's early trade. As concerns of a recession receded, though, benchmark futures were headed for weekly gains.


Brent oil prices declined 34 cents, or 0.3%, to $99.26 per barrel at 01:12 GMT, while West Texas Intermediate (WTI) crude futures decreased 34 cents, or 0.3%, to $94.00 per barrel.


Brent was anticipated to gain by more than 4% for the week, recouping a chunk of last week's 14% decline, which was its largest weekly decline since April 2020 due to fears that rising inflation and interest rate hikes will hinder economic growth and fuel demand.


WTI was poised for a weekly gain of more than 5%, recovering more than half of the previous week's loss.


"Regarding demand, there is a great deal of uncertainty in the near future. Until this issue is remedied, market volatility will persist "Chief economist of Westpac, Justin Smirk, commented.


Thursday, the Organization of the Petroleum Exporting Countries (OPEC) decreased its forecast for the increase in world oil demand in 2022 by 260,000 barrels per day. (bpd). This year, it predicts a 3.1 million bpd growth in demand.


That contradicts the stance of the IEA. As a result of gas-to-oil conversion in power generation in response to soaring gas prices, the latter boosted its demand growth forecast to 2.1 million bpd.


Moreover, the IEA upped its forecast for Russian oil supply by 500,000 bpd for the second half of 2022, as the nation's output proved more resilient than anticipated in the face of sanctions implemented in response to the Ukraine conflict. According to the IEA, it would be difficult for OPEC to boost output.


According to Commonwealth Bank analyst Vivek Dhar, the IEA gave a mixed picture overall. The reliability of Russian supply has exceeded expectations.


"Comprehending the global oil balances at the end of the year at this time is challenging, given the current demand and supply conditions. This explains the daily instability."

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