Crude oil futures fell to a six-week low on Wednesday (June 22) as investors feared the Federal Reserve’s (Fed) interest rate hike could plunge the U.S. economy into recession and slow oil demand.
- WTI crude futures fell $3.33, or 3%, at $106.19 a barrel.
- BRENT crude futures were down $2.91, or 2.5%, at $111.74 a barrel.
The Fed Chairman confirmed to Congress yesterday that the Fed is committed to containing inflation, and the Fed is moving swiftly toward that goal. The Fed has both the tools and the intent to restore price stability for American households and businesses.
Powell said the U.S. economy is in a favorable state. It has a strong labor market and high demand.
However, Powell acknowledged that inflation was too high and needed to slow.
When asked by the congressional committee whether the Fed is raising interest rates too quickly, which could trigger an economic recession, Powell responded, “It’s certainly a possibility. It’s not our intended outcome at all but it’s certainly a possibility,“ adding, “We’re not trying to provoke, and don’t think that we will need to provoke, a recession. But we do think it’s absolutely essential that we restore price stability, really for the benefit of the labor market as much as anything else.“
Investors are awaiting reports that President Joe Biden will propose that Congress authorize a three-month suspension of the gasoline tax, currently 18.4 cents per gallon, in an effort to bring down rising prices.
Investors are also waiting for the EIA crude oil inventory report today.
The Spot Market is Open
Thursday, June 23, 2022