Oil is down more than 20% from its yearly highs - a classic
case of a bear market. WTI Oil closed yesterday at $43.33/barrel (yearly high
is $55.21). Brent closed at $45.80/barrel (yearly high is $58.35).
The benchmarks look set to end on a weaker note for the
fourth consecutive month.
The bear market clearly represents the OPEC’s failure to
convince markets that the 9-month extension of the output cut deal would
counter the rise in the US Shale output and therefore reduce the supply glut.
Also responsible for the drop in the oil prices is the increased production by
countries like Libya, which have been exempt from the supply glut deal.
Drop in headline CPIs likely, Fed could go slow with the rate hikes
The sell-off in the oil prices is likely to push the
headline CPI (which includes energy prices) lower across the globe. The drop in
the CPI would be more painful for the inflationists rooting for 2% annualised
rise in inflation across the advanced world.
The drop in the inflation may provide room for the Fed to go
slow with the rate hikes. Markets do not expect the Fed to hike rates until
December.
Current Crude Oil
Status:
Currently, Crude Oil is
trading at 43.43, down -0.18%, having posted a daily high at 43.57
and low at 43.35.
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