Oil Prices Continue to Plummet Amidst Economic Worries: Oil prices have extended their downward trend for the fourth week in a row, as concerns about the global economy continue to weigh on the petroleum market. Prices were down by 0.42% on the day, with the U.S. benchmark WTI Crude falling below $70, while Brent Crude traded at $74.62. This marks the longest weekly losing streak for oil since November 2021, with both benchmarks set to book their fourth consecutive weekly loss.
U.S. Debt Ceiling Impasse Weighing Heavily on the Market
One of the main factors contributing to the downward pressure on oil prices is the impasse on raising the U.S. debt ceiling and the looming threat of a debt default. This uncertainty in the market is causing investors to worry about the U.S. economy, which is still suffering from the impact of COVID-19. This has led to a decrease in demand for oil, causing prices to drop even further.
Inflation Data Not Enough to Boost Oil Prices
Despite a decline in core consumer prices reported by the Energy Information Administration (EIA), oil prices still remain low. The sticky inflation is causing analysts to speculate that the Federal Reserve may not start cutting rates in the near term. In addition, the EIA reported an inventory build of 3 million barrels for the week of May 5, adding to the market’s worries about a decrease in demand for oil.
China’s Economic Recovery is Patchy, Adding to Oil Market Woes
Another factor contributing to the downward trend in oil prices is China’s patchy economic recovery. The world’s second-largest economy is still struggling to recover from the pandemic, with analysts speculating that the government may take a long time to return to pre-pandemic growth levels. This is further contributing to the decline in demand for oil, causing prices to drop.
Oil prices have been on a steady decline for the past four weeks, largely due to concerns about the global economy and the looming debt ceiling impasse in the U.S. The petroleum complex is facing numerous challenges, including a patchy economic recovery in China and a decline in demand for oil. As the global economy continues to struggle, it remains to be seen when oil prices will begin to recover.