Crude oil is falling on signs of weak demand
- Matt Phillips, author of Axios Markets
U.S. crude prices continue to tumble as stockpiles of oil and gas climb.
Why it matters: Falling energy prices could help lower the next round of inflation readings, reducing pressure on the Federal Reserve to continue the rate-raising campaign that clobbered the stock market during the first half.
Driving the news: U.S. benchmark West Texas Intermediate crude oil closed below $90 a barrel for the first time since February, before the Russian invasion of Ukraine set off a near crisis in global energy markets.
- Recent reports from the Energy Information Administration showed rising stockpiles of oil and gasoline, hinting at a slowdown in demand.
- OPEC, the global oil cartel, also decided on Wednesday to boost production, albeit modestly.
- Benchmark gasoline futures prices are also down sharply this week. If sustained, that should ease prices at the pump (now averaging just over $4) in the coming weeks.
Yes, but: Goldman Sachs commodities analysts wrote in a recent note to clients: "The world is still facing a generalized energy shortage that spans the entire energy complex — from oil to natural gas and even to coal — due to both demand and supply factors that are unlikely to ease in the coming months."