October West Texas Intermediate Crude oil futures posted a volatile trade on Thursday on top of a bearish weekly performance. The price action reflected a myriad of factors from economic data to geopolitical shifts.
Demand Worries from Economic Data
Concerns about global economic health cast a shadow over oil prices. Weak figures from major economies, including Japan's shrinking factory activity, declining business activity in the Eurozone, and Britain's potential economic contraction, have heightened demand anxieties. Even in the U.S., economic growth seemed to hover near stagnation in August. All eyes are now on U.S. Federal Reserve Chair Jerome Powell, whose speech at the Fed’s Jackson Hole Symposium on Friday is keenly awaited by investors, given the implications for the broader economy.
U.S. Dollar Strength
As Federal Reserve Chair Jerome Powell gears up for his speech at the Jackson Hole symposium, the trading world waits with bated breath. There's rising concern that a hawkish tilt from the Federal Reserve could boost the dollar, making oil costlier and subsequently suppressing demand. A robust dollar invariably means higher oil prices for holders of other currencies, affecting demand dynamics. Given the hints of the Federal Reserve adopting a more assertive approach and the prevailing uncertainties about U.S. interest rates, the trajectory of the dollar remains crucial in shaping the oil market landscape.