Asia-Pacific market briefing
Crude oil prices are looking vulnerable as the new trading week gets underway. On Friday the front-month spread in WTI futures went into contango for the first time in about one year – see chart below. This is what happens when the futures price is higher than the spot level, often an issue of near-term supply-demand imbalances. For the oil market, this is very bearish.
This past week, we have seen a slew of hawkish Fedspeak cross the wires. The messages coming from officials have been straightforward. While the pace of tightening is likely to slow ahead, the Federal Reserve remains committed to raising rates. St. Louis President James Bullard noted that at a minimum, he sees rates around 5 – 5.25%.
In fact, this past week, news flow from central bank officials has been helping to cool the decline in Treasury yields and bolster the US dollar. A combination of global monetary tightening and a rising Greenback are working in tandem to depress oil prices. This is despite recent efforts from OPEC+ members to reduce output ahead.
Crude oil futures front-month spread
news.google.com