Trafigura Says ‘Fragile’ Oil Market May Be Prone to Price Spikes
Major commodities trader Trafigura Group warns that oil prices could see a spike due to higher interest rates and underinvestment in the market.
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Posted 9/4/2023, 10:17:09 AM
yahoo.com
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Oil prices edge higher in an uncertain market as US crude futures rise 0.1% to $78.94 a barrel, despite a 2% drop for the week, due to production cuts by major oil producers and a mixed US economy.
Crude oil prices could be vulnerable to further rises due to tight supply, warns Ben Luckock, Co-Head of Oil Trading at Trafigura.
Rising WTI crude oil prices are raising concerns about higher inflation, which the Federal Reserve is trying to avoid, according to Moody's Analytics Chief Economist Mark Zandi.
Oil prices are reaching their highest levels in 10 months, leading to gains for energy stocks like Pioneer Natural Resources and Coterra Energy, prompting Jim Cramer to suggest it's a good time to invest in these companies.
Gasoline prices are rising due to oil supply cuts in Saudi Arabia and Russia, as well as flooding in Libya, but some experts believe that increasing oil prices will not have a significant impact on the US economy and do not expect them to rise much higher in the next year or two due to factors such as increased US oil production, slow global economic growth, and the green energy transition. However, high oil prices can lead to higher inflation, potential recession, and could influence the Federal Reserve to raise interest rates, but the impact may not be as severe as in the past, and some experts recommend investing in the energy transition and adopting a more defensive investment strategy.
Oil prices surged to a 10-month high on tightening supply cuts from OPEC+, with predictions of $100 oil returning, potentially rekindling inflation and posing a challenge for central bankers and the Biden administration.
Rising oil prices pose a risk to the Federal Reserve's efforts to achieve a soft landing for the economy and return inflation to its 2% target without triggering a downturn.
Rising oil prices continue to soar due to supply cuts by Saudi Arabia and Russia, with Brent and WTI crude prices reaching their highest level since November and targeting their biggest quarterly jumps since 2014, causing concerns about potential inflation and impacting industries reliant on fuel such as airlines and trucking companies.
Oil prices dipped after reaching a 10-month high due to profit taking and anticipation of a Fed decision on interest rates, but analysts remain bullish on the future of oil.