Oil crawls up after dipping more than 5% on Tuesday

Highlights

• Crude oil prices inched higher on Wednesday.
• The IMF has lowered its forecast for global growth by nearly a full percentage point.
• The bearish outlook added to price pressure from the dollar trading at a nearly two-year high level, making prices of commodities higher.

Crude oil prices rose around 1% on Wednesday, gaining back the losses of the initial trading session on concerns about energy demand after the International Monetary Fund (IMF) cut its economic growth forecasts.

On Tuesday, the IMF lowered its forecast for global growth by nearly a full percentage point, quoting the economic impacts of Russia's war in Ukraine, and rising inflation concerns for many countries.

The prices dipped by nearly 5% in a volatile trading session yesterday after IMF’s forecast. Earlier the prices gained nearly 1% on Monday as outages in Libya strengthened the concerns over tight global supply.

The bearish outlook added to price pressure from the dollar trading at a nearly two-year high level, making prices of commodities higher for other currency holders.

Earlier, the prices of Brent Crude Oil reached US$114 per barrel on Monday after Libya said it could not deliver oil from its biggest field and shut another field due to political protests.

Glancing on the demand side, it is expected that the demand will ramp up as China begins to pick up as manufacturing plants prepare to reopen in Shanghai.

Also Read: Crude oil surges to 14-year highs on delays in Iranian talks

On Tuesday, both contracts settled down more than 5.22% with Brent Crude oil settled at US107.25/bbl and WTI crude oil settled at US$102.56/bbl.

Source: EODHD/Others Eikon

On Wednesday, June delivery Brent Crude oil futures inched higher and last traded at US$107.71 per barrel up 0.45%, while June delivery WTI crude oil futures exchanged hands at US$102.69 per barrel, up 0.63% at 12:15 PM AEDT.

Must Watch: As Russia-Ukraine War Intensifies, Commodities Also Soars

Falling prices despite lower output

The significant drop in crude oil prices has been witnessed despite lower output from OPEC+ which produced nearly 1.45Mbpd below its targets in March due to the Western sanctions on Russia over its invasion of Ukraine.

Russia’s overall production dropped by nearly 300,000bpd below its target in March at 10.018 million bpd.

On top of the current crisis in the oil market, the possibility of a European Union ban on Russian oil continues to keep the market on edge. European Union has already banned Russian coal and now it is drafting proposals for the Russian oil embargo.

Also Read: Crude oil slides from multi-year highs as Iran talks rev up

Bottom Line

Crude oil prices inched higher on Wednesday after dropping more than 5% on the previous day following a lower growth forecast made by the International Monetary Fund. Crude oil prices have been rising since Russia officially announced to invade Ukraine in February 2022.

Here’s how commodities performed in the last week click here