Should You Expect Another Recession in The Oil Market?
Oil prices were little changed on Monday; it settled slightly higher as fears of a future recession competed with the prospect of stronger gasoline consumption due to the forthcoming summer driving season in the United States and Shanghai’s preparations to reopen after a two-month coronavirus quarantine.
WTI crude in the United States rose 1 cent, or 0.01 percent, to $110.29 a barrel; meanwhile, Brent crude futures rose 87 cents, or 0.7 percent, to $113.42. “Dark clouds are rising over the financial markets here, and crude oil has begun to suffer,” said Bob Yawger; Mizuho’s director of energy futures.
What Are the Dangers to The Global Economy?
At the annual Davos economic meeting, many dangers to the global economy topped the list of concerns among the world’s well-heeled; some predicted a global recession. Kristalina Georgieva, Managing Director of the International Monetary Fund, said she did not foresee a recession in big nations but could not rule it out. Expectations that gasoline consumption would continue high capped oil’s losses. The peak driving season in the United States should begin on Memorial Day weekend at the end of this week. Despite concerns that rising gasoline prices would dampen demand, experts said mobility data from TomTom and Google (NASDAQ: GOOGL) had increased in recent weeks; this indicated more drivers on the road in locations like the United States.
The White House is considering an emergency declaration; it wants to release diesel from a seldom utilized stockpile to meet a serious supply shortage and lower prices. The White House is considering using the Northeast Home Heating Oil Reserve; the White House established it in 2000 to address supply difficulties; however, it only utilized it only once in the aftermath of Hurricane Sandy in 2012. Because the reserve is so small, the impact of such a discharge would be minimal. After Russia invaded Ukraine, which Moscow describes as a “special operation,” the European Union’s reluctance to achieve a definitive agreement on banning Russian oil has restrained oil price rises. Hungary opposes the planned prohibition, ensuring that the supply chain will not disrupt.
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