News Oil Falls Around 3% As Investors Eye US Fed Rate Hikes

Oil Falls Around 3% As Investors Eye US Fed Rate Hikes

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Oil Falls Around 3% As Investors Eye US Fed Rate Hikes

After falling around 3% on Wednesday, oil prices have been in retreat throughout the day on Thursday. Investors continue...

After falling around 3% on Wednesday, oil prices have been in retreat throughout the day on Thursday. Investors continue to be concerned about the US Federal Reserve’s upcoming rate hikes. Hedge funds in the US and Europe have been selling off positions ahead of the end of the second quarter, chilling investor sentiment. US President Joe Biden, meanwhile, called on Congress to pass a three-month suspension of the federal gasoline tax to help deal with the problem of record-high fuel prices. If enacted, it will increase fuel demand, supporting crude oil prices.

The median Dot plot for end-year 2022 showed a 3.8% increase, higher than the 3.66% that was forecast going into today’s meeting. The recent Dot plots are showing a great deal of volatility as Powell speaks. Markets have yet to fully price in a pause or slowdown from the Fed, allowing the dollar to trade near its current high.

President Joe Biden wrapped up his five-day trip to Europe, where he spoke about U.S. policy in response to Vladimir Putin. However, he also has to deal with domestic turmoil. On the other hand, the OPEC oil cartel and allied producing nations have agreed to boost their output this year, which isn’t likely to alleviate energy-fueled inflation.

The pivot marks the end of deflationary policy, forcing investors to reassess their investments. Meanwhile, as the outlines of the reshaped economy begin to emerge from the pandemic fog, investors’ attention has shifted to the prospects of US Fed rate hikes. The pivot to higher rates may be accompanied by a new phase of quantitative tightening.

The markets have fallen for three weeks in a row to start the year 2022. This sell-off has battered all sectors and piled losses on high-risk speculative areas. While investors are focused on the Fed meeting later this week, the next two days will see a flurry of earnings reports. With the market in a “white-knuckle period,” investors are desperate for positive news.

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