WTI oil prices edged higher in early Wednesday trading but remain near the multi-week low reached in the previous session. The price of crude has fallen by more than 15% from the $78 peak seen on Monday, as supply concerns eased amid growing hopes for an end to the armed confrontation between Israel and Iran. For over a week, oil prices had risen on the back of a risk premium driven by fears that Iran might close the Strait of Hormuz — a critical chokepoint through which around 25% of global maritime oil transport passes. However, as that scenario now appears increasingly unlikely, markets have breathed a sigh of relief, with prices retreating to just above $65 — roughly the level seen before Israel attacked Iran on 13 June. With supply concerns subsiding, traders are again turning their attention to the global economic outlook to gauge future demand. The full impact of tariffs on inflation and global growth remains uncertain, making demand forecasts more challenging. Against this backdrop, yesterday’s testimony by Jerome Powell before the US Congress gave the impression that the Federal Reserve is unlikely to cut interest rates in July. That stance weighed on demand expectations and, in turn, put additional downward pressure on oil prices.
Ricardo Evangelista, ActivTrades
Source: ActivTrader
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