Jakarta, CNBC Indonesia – Crude oil prices have fallen freely this week as the issue of the global recession continues to overshadow and suppress the demand for commodities, including crude oil.
West Texas Intermediate (WTI) crude oil closed 3.93% lower at USD 85.61 / barrel on Friday (14/10/2022), while Brent closed 3.11% lower. at 91.63 USD / barrel.
In five trading days, crude oil prices managed to strengthen only on Wednesday (13/10).
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Indeed, during this week, the two global benchmark crudes dropped dramatically. WTI crude oil fell by 7.59% and Brent oil by 6.42%.
The problem of a global recession, which has become increasingly widespread in recent times, has increasingly suppressed the movement of this ‘black gold’. Not just a recession, the world also risks facing the risk of a long recession. The reason is that the US central bank (the Fed) expects to maintain high interest rates for a long time.
This is indicated by the release of the minutes of the monetary policy meeting on Thursday (13.10.2022) in the early hours of the morning.
The note said Fed members had been surprised by the rapid rise in prices, so they wanted interest rates to stay high until inflation fell.
“Participants felt that the Committee needed to shift (raise interest rates) and maintain it towards a more restrictive monetary policy to achieve maximum job mandates and price stability,” reads the note as reported by CNBC International. .
With interest rates held high, the recession could continue, blurring the outlook for crude oil.
Economist Nouriel Roubini, better known as Dr. Doom, when he successfully predicted the 2008 financial crisis, now predicts that a recession will hit the United States by the end of 2022 before spreading globally next year.
“This will not be a short and superficial recession, it will be a serious, long and bad recession,” Roubini said, as reported by Fortune, Wednesday (9/21/2022).
Additionally, OPEC and the US Department of Energy have reduced the outlook for crude oil demand this year. OPEC estimates that the demand for crude will drop between 460,000 and 2.64 million barrels per day.
Crude oil prices were also weighed down by the strengthening of the US dollar in the spot market, so that crude oil prices became more expensive for holders of other currencies. All this week, yes greenback it gained up to 0.46% and is at 113.31, closer to the last two decades high of 114.7.
However, if world crude oil prices continue to be correct, it is not impossible to bring down the domestic price of fuel oil (BBM), especially unsubsidized.
RESEARCH TEAM OF CNBC INDONESIA
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