Oil Struggles To Maintain Momentum As Global Rate Hikes Sink In

But some analysts say the hikes weren't as severe as initially thought: File Image/Pixabay

With markets said to be largely following macroeconomic indicators after banks globally imposed a series of rate hikes to tame inflation, oil prices clung to extremely modest gains on Thursday – not enough to prevent the commodity from staying on track for its first quarterly decline in more than two years on fears that the hikes will ruin demand.

West Texas Intermediate rose 55 cents to $83.49 per barrel, while Brent settled up 63 cents to $90.46 per barrel.

Robert Yawger, director of the energy futures division at Mizuho Securities USA, remarked that traders are "waiting for the next headline to dictate market direction here; you're looking for some kind of fundamental part of the puzzle to change dramatically to put the bid in."

John Kilduff, founding partner at Again Capital, added that in the wake of Russia going ahead with its biggest conscription since World War Two, "[Russian president Vladimir] Putin's bellicose rhetoric is what's propping up this market."

It was also said that the Organization of the Petroleum Exporting Countries (OPEC) lent support to the crude market on Thursday by virtue of the cartel's supply constraints; Giovanni Staunovo, commodity analyst at UBS, explained, "OPEC crude exports have levelled off from a strong increase at the start of this month."

OPEC also earned headlines on Thursday when Timipre Sylva, oil minister for Nigeria, offered the most transparent explanation thus far of why the cartel is so determined to impose additional output cuts if crude prices continue their downward trajectory: Sylva told Bloomberg OPEC will act because the drop in prices is adversely affecting the budgets of some of its members.

While there is no end of bearish indicators for crude in the near future, good news emerged from China on Thursday: demand in the world's largest oil importer is reportedly rebounding after yet another series of crippling Covid restrictions continues to be lifted by degrees.

Also, while the interest rate hikes garnered the lion's share of press attention, many of the rate hikes were less severe than anticipated, for example: the Bank of England raised its key interest rate by 50 basis points to 2.25 percent and said it would continue to "respond forcefully, as necessary" to inflation – but ING Bank said the hike was "less than markets had been pricing and defying some expectations that UK policymakers might be forced into a larger move."

For its part, Turkey's central bank unexpectedly cut its policy rate by 100 basis points to 12 percent.