Crude Oil Ends Winning Streak With First Weekly Drop in Nearly a Month
Key Takeaways
- •Crude oil recorded its first weekly decline in three weeks as flows through the Strait of Hormuz improved.
- •Brent crude fell more than 5% for the week, while U.S. West Texas Intermediate declined over 4%.
- •Analysts at JPMorgan and Goldman Sachs cautioned that prolonged shipping disruptions in the region could push oil prices higher.
- •New Federal Reserve Chairman Kevin Warsh signalled that U.S. interest rates could rise later this year to curb inflation.
- •Higher U.S. interest rates have historically weighed on commodity prices by strengthening the dollar and dampening fuel demand growth.
Crude oil prices recorded their first weekly decline in three weeks, breaking a recent winning run, as improving flows through the Strait of Hormuz eased concerns about global supply. The Strait of Hormuz, located between Oman and Iran, is one of the world's most important oil chokepoints, with a large share of globally traded crude and petroleum products passing through it, which is why shipping conditions there regularly move benchmark prices.
Brent crude fell more than 5% over the week, while U.S. West Texas Intermediate (WTI) declined over 4%.
Despite the weekly drop, risks to the upside remain. Analysts at JPMorgan and Goldman Sachs have flagged that prolonged shipping disruptions in the region could push prices higher.
Oil prices also came under additional pressure after new U.S. Federal Reserve Chairman Kevin Warsh signalled that interest rates could rise later this year in an effort to curb inflation. Higher U.S. interest rates have historically weighed on commodity prices by strengthening the dollar and raising the cost of financing for consumers and businesses, which can dampen fuel demand growth.
Source: Economic Times Markets
