CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 87.41% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Scan to Download iOS&Android APP

Crude outlook: Oil price awaits a clearer picture of global economic growth

By Munikoti Rochan

14:35, 22 July 2022

Share this article
In this article:
Oil - Crude
Crude Oil
77.67 USD
-2.62 -3.260%
COILQ22
Brent Crude Oil Futures Aug 2022
116.15 USD
-1.82 -1.540%

Subscribe to Weekly Highlights

The major market events for the week ahead right in your inbox. Subscribe
A crude oil carrier docked at a tank farm on Jurong Island, Singapore.
Crude oil prices could trade sideways in the coming weeks - Photo: Getty Images

Will it be a fairly uneventful few weeks for crude oil prices? It could, at least until a clearer picture of the global economy’s outlook, and resultant fuel demand projections, emerge, according to analysts.

The price of oil has been drifting lower for more than a month now, with the West Texas Intermediate (WTI) grade slipping back from above $120 a barrel to around $95 per barrel more recently.

WTI crude price chart

“Oil prices recently traded to a five month low – reflecting concerns about just how much the global economy will slow down, to the problems of high inflation in major economies,” according to David Jones, chief market strategist at Capital.com.

“Since the post-Ukraine invasion highs, oil has struggled to find much direction and has broadly speaking been stuck in a sideways range in recent months. At the moment is seems difficult to see that changing – and even more difficult to think of a reason why oil would take out the March highs.

“Perhaps the best hope is that oil continues to trade in this range,” Jones said. He also added that traders should not be “too surprised” if by this time next month both WTI and the global benchmark Brent grade were trading at prices similar to current levels.

What is your sentiment on CLQ22?

104.23
Bullish
or
Bearish
Vote to see Traders sentiment!

Brent oil price chart

Crude oil futures bounced back in early trading in Asia on 22 July after losses through two straight sessions triggered “some bargain-hunting buying”, said analysts at Singapore-based energy intelligence firm Vanda Insights.

US crude futures climbed 0.74% to $96.98 per barrel, while Brent oil was up 0.92% at $104.79 a barrel.

“Once again, there was no major news on the fundamentals front in the oil markets on Thursday but crude futures came in for a sharp sell-off starting in the European trading day on the back of growing pessimism over global fuel demand as world economies battle the twin pressures of inflation and monetary tightening,” the company wrote in a 22 July note.

Natural Gas

5.60 Price
-10.180% 1D Chg, %
Long position overnight fee 0.0390%
Short position overnight fee -0.0628%
Overnight fee time 22:00 (UTC)
Spread 0.005

Silver

22.31 Price
-3.600% 1D Chg, %
Long position overnight fee -0.0203%
Short position overnight fee 0.0075%
Overnight fee time 22:00 (UTC)
Spread 0.020

Oil - Crude

77.67 Price
-3.260% 1D Chg, %
Long position overnight fee -0.0091%
Short position overnight fee -0.0054%
Overnight fee time 22:00 (UTC)
Spread 0.03

Oil - Brent

83.10 Price
-3.380% 1D Chg, %
Long position overnight fee 0.0025%
Short position overnight fee -0.0175%
Overnight fee time 22:00 (UTC)
Spread 0.04

Weakening currencies stifle demand

A broad appreciation of the US dollar against weaker Asian currencies is dissolving hopes of a petrochemical demand recovery in Asia, because imports into the region are becoming more expensive, cautioned global commodities intelligence provider ICIS.

A “rising (US) dollar effectively reduces liquidity as most commodities are priced in (US) dollars,” New Normal Consulting’s chairman Paul Hodges told ICIS on Friday.

“So, when the (US) dollar rises, commodities tend to fall, which is what has happened to many of them since the rise began at New Year,” he added.

Lagging recovery for top crude buyer

China is the top importer of crude oil. But the world’s second-largest economy is “still limping”, said Julian Evans-Pritchard, a senior China economist at Capital Economics.

“Our China Activity Proxy (CAP) suggests that the economic hit from lockdowns had largely reversed in June,” Pritchard told clients on Thursday. “But (coronavirus) infection numbers are ticking up again. And even if another large-scale virus wave is avoided, problems in the property sector and headwinds to exports will limit further economic gains.”

The price of Brent crude oil plunged about $10 to the barrel on 5 July, the third largest one-day change in absolute terms since the price contract was launched in 1988, dragged down by panic selling, following concerns of a looming global economic recession.

 

Related reading

Rate this article

Share this article

The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
Capital Com is an execution-only service provider. The material provided on this website is for information purposes only and should not be understood as an investment advice. Any opinion that may be provided on this page does not constitute a recommendation by Capital Com or its agents. We do not make any representations or warranty on the accuracy or completeness of the information that is provided on this page. If you rely on the information on this page then you do so entirely on your own risk.

Latest Commodities news

Still looking for a broker you can trust?

Join the 475.000+ traders worldwide that chose to trade with Capital.com

1. Create & verify your account 2. Make your first deposit 3. You’re all set. Start trading