(New York) Oil prices plunged on Thursday after another burst of interest rate hikes in the UK, Norway, Turkey and Switzerland, reigniting fears of a global recession that could dent demand for gold black.
A barrel of Brent from the North Sea, for delivery in August, lost 3.86% to 74.14 dollars.
Its American equivalent, a barrel of West Texas Intermediate (WTI) for delivery the same month, fell 4.16% to 69.51 dollars.
Increases in key rates by the major central banks have consequences for demand for oil, as they weigh on economies by increasing the cost of credit for households and businesses.
“It seems energy investors are focused on aggressive messages from the Fed and other central banks” to fight inflation rather than the “relatively upbeat EIA report on crude oil”, outlining the weekly US trading stocks, Oanda analyst Edward Moya told AFP.
US crude oil inventories fell by 3.8 million barrels last week in the United States, to the surprise of analysts who expected a small increase, according to figures released Thursday by the United States Agency. Energy Information (EIA). These favorable data should have supported prices.
“Despite an unexpected decrease in US stocks […]growing fears that energy demand could collapse – given the Bank of England’s surprise fifty basis point rate hike and the continued hawkish rhetoric of the Fed – drove WTI under the $70 mark,” explained Bart Melek of TD Securities.
The analyst also cites fears “of an impending recession in the United States, weak Chinese economic performance and positive Iranian shipment data” which play “an important role in the fact that fund managers have moved away from the oil market”.
The Bank of England raised rates on Thursday for the 13e times in a row by 0.5 points, bringing them to 5%. The Bank of Norway has gone into overdrive to try to curb inflation, also raising its key rate by 0.5 points on Thursday, to 3.75%.
Turkey’s central bank meanwhile raised its key interest rate to 15% on Thursday in a major reversal at its first monetary policy meeting since President Erdogan’s re-election.
Finally, the Swiss National Bank (SNB) also lined up on Thursday in the camp of the central banks which continue to raise their key rates, bringing theirs to 1.75%, or 0.25 points more.
With this new burst of rate hikes, “recession fears are growing,” said Tamas Varga, of PVM Energy, interviewed by AFP.