Global oil prices dive amid reduced demand. According to the IMF, a third of the global economy will contract this year.
LONDON: On Wednesday, the price of oil fell dramatically due to worries about Chinese consumption, and gas prices in Europe fell to their lowest levels since November 2021 as a result of mild winter conditions that cut demand dramacool2.
Concern over demand in the world’s largest oil consumer, China, as well as a sharp increase in COVID infections in the nation caused crude prices to extend their losses from the previous day, falling by roughly 5%.
The view seems to be that there will be significant disruption in the coming months. Followed by a recovery starting around the middle of the year, which should then boost demand.
Despite the fact that reliable data is reportedly difficult to come by, according to Craig Erlam, senior market analyst at. OANDA trading platform. Analysts also cited the mild.
European winter and a rise in the dollar as reasons why holders of foreign currencies must pay more for crude. Around 1600 GMT, a barrel of WTI for February delivery was down 4.9% at $73.15, and a barrel of Brent for March delivery was down 4.9% at $78.11.
Meanwhile, mild winter weather lowered demand, erasing all of the gains made last year amid Russia’s invasion of Ukraine, and wholesale natural gas prices in Europe plunged to their lowest levels since November 2021.
At roughly 1620 GMT, the benchmark European contract, Dutch TTF gas future for the following month, fell 9.3% to 65.59 euros, increasing losses from the start of the week.
Following declines in government bond yields, the drop in gas prices. And statistics showing a slowdown in German and French inflation, European markets extended their rise from the previous day, with Paris and Frankfurt finishing more than 2% higher.
London’s stocks managed a relatively modest increase, closing the day 0.4% ahead. Despite concerns over the US economy’s future, Wall Street equities edged up as investors anticipated. Crucial data that was supposed to provide guidance on the direction of monetary policy. The last day of the so-called Santa Claus bounce.
Which lasts between Christmas and New Year’s and often sees stocks moving higher amid low trading volumes. as identified by Briefing.com analyst Patrick O’Hare as the cause of the uptick.
The final day of the “rally period” is today, and Santa Claus is barely clinging on, the man stated. At $1,865.12 an ounce, gold prices are at their highest level since June as traders look for security in the well-known safe-haven metal.
Hints on Fed moves
The release of the Federal Reserve’s December policy meeting minutes on Wednesday caught the attention of investors. The US central bank delayed the rate of rate increases at that meetin.
But it also hinted that borrowing costs may rise faster than anticipated. The minutes will be scrutinised for hints about officials’ plans for this month’s summit after the news derailed a pre-Christmas rally across global markets.
In an effort to slow down demand and control skyrocketing inflation, the Fed increased interest rates seven times in the past year. Fed officials have indicated they will continue this strategy until the task is completed.
The International Monetary Fund (IMF) chief has also warned that a third of the global economy will contract this year, and there is a general consensus that the Fed’s tightening policies will push the US economy into recession.
Shanghai experienced its second straight day of gains as Hong Kong led earlier in Asia’s stock market rises. Tokyo had a sharp decline on the first trading day of the year, as the yen’s recovery continued to hurt Japanese exporters.
Key figures around 1640 GMT
West Texas Intermediate: DOWN 4.6% at $73.40 per barrel
Brent North Sea crude: DOWN 4.6% at $78.36 per barrel
London – FTSE 100: UP 0.4% at 7,585.19 points (close)
Frankfurt – DAX: UP 2.2% at 14,490.78 (close)
Paris – CAC 40: UP 2.3% at 6,776.43 (close)
EURO STOXX 50: UP 2.4% at 3,973.97
New York – Dow: UP 0.7% at 33,355.16
Tokyo – Nikkei 225: DOWN 1.5% at 25,716.86 (close)
Hong Kong – Hang Seng Index: UP 3.2% at 20,793.11 (close)
Shanghai – Composite: UP 0.2% at 3,123.52 (close)
Dollar/yen: UP at 131.99 yen from 130.92 yen on Tuesday
Euro/dollar: UP at $1.0614 from $1.0554
Pound/dollar: UP at $1.2049 from $1.1969
Euro/pound: DOWN at 88.07 pence from 88.15 pence