European Central Banks Raise Rates for First Time in 11 Years
July 22, 2022
The energy markets were down hard in early trading but did rally back off their lows. WTI crude oil settled $1.76 off its low. RBOB gas was $0.1246 cents off its low of the day and ULSD was $0.1673 cents of its low of the day. Lower demand, concerns about a recession, and high gas prices have caused demand destruction and sold the market off. Tons of uncertainty surrounding all these factors in the market had buyers buying energy on the dip and that brought it back up off the lows. Many traders are looking for value and prices on gas futures and ULSD future have come down roughly one dollar per gallon over the last month and this could spur some buying.
The EIA said that product supplied, implied demand, for the week ending July 15th was 8.521 million bpd, which is 7.6% lower than last year. A sing high gas prices are lowering consumer demand.
The European Central Banks raised rates for the first time in 11 years and more aggressively than expected. This action helped the market sell of the yesterday as increase rates could impact demand negatively.
Eurozone manufacturing reported a decline in activity this month for the first time since the first wave of the pandemic in 2020. Data showed the purchasing managers index fell to 49.6 down from 52.1 in June and 54.6 in May.
The spread between WTI crude oil and Brent crude oil has widen(Brent higher than WTI) as US gasoline consumption has slowed in the middle of the summer prime driving season.
A power outage has reduced flows from the Keystone Pipeline that runs from Canada to Cushing by 15% with no forecast when it will return to normal flows.