Oil prices saw a weekly fall as central banks stoked recession worries. The prices of Brent crude and West Texas Intermediate both fell by more than 2% during the week, with Brent crude falling to $57.81 per barrel and West Texas Intermediate falling to $52.45 per barrel. The fall was attributed to concerns over the global economy, as central banks around the world took steps to stoke growth amidst fears of a recession.
The US Federal Reserve cut interest rates for the second time this year, citing “uncertainties” in the economic outlook and the need to support growth. The European Central Bank also announced a new package of stimulus measures, including a cut to its deposit rate and the resumption of its bond-buying program.
The moves by central banks were seen as an attempt to counteract the effects of the US-China trade war, which has weighed heavily on global growth prospects. The ongoing tensions between the two countries have also contributed to a slowdown in demand for oil, which has put downward pressure on prices.
Despite the fall in prices, analysts remain cautiously optimistic about the outlook for oil. While concerns over the global economy and trade tensions continue to weigh on prices, there are signs that OPEC and other major producers are taking steps to support the market. OPEC and its allies have agreed to cut production by 1.2 million barrels per day, while US production growth has slowed in recent months.
Price action refers to the movement of an asset’s price over time. In the case of WTI futures, the price has dropped below $70 a barrel four times this year and appears to be doing so with increasing frequency. However, according to analysts at Sevens Report Research, the technical support between $67 and $69 a barrel has held each time. This is an interesting development that suggests that there is strong demand for oil at these price levels.
It is worth noting that each subsequent bounce in prices has run out of steam at a lower price point. This suggests that there may be some resistance to higher prices in the short term. However, it is also possible that this resistance could be temporary and that prices may eventually break higher.
The price action in WTI futures is something that investors should keep a close eye on. While there are certainly risks to the downside, there are also opportunities for those who are able to identify and capitalize on them. As always, it is important to do your own research and to consult with a professional financial advisor before making any investment decisions.
Bottom Line
Overall, the outlook for oil prices remains uncertain, as the global economy continues to face a range of challenges. However, the actions of central banks and major producers suggest that there is some cause for optimism in the longer term. The business cycles are a continuous phenomenon. So, global economy would be out of the recession soon.
