The price of oil slumped for more than 3 percent on Thursday. This was happened inline with the underpressured demand and the raising of COVID-19 cases in China.
Besides that, there is also a concern about a more aggressive interest rate increase in America. Brent crude oil declined by $2.81 to become $90.05 per barrell.
WTI or also known as West Texas Intermediate also declined by $3.54 or 4.1 percent lower than before. It becomes $82.05 per barrel in the market.
St. Louis Federal Reserve President, Mr. James Bullard, said that the basic monetary policy rules will let the interest rate increase. The amount is at least five percent.
Dollar was Higher Too
Meanwhile, a tighter assumption will recommend interest rate for more than 7%. Dollar was also higher because investors learn about the economIC data in the United States.
A stronger dollar makes oil within the USD denomination is more expensive for other currencies holder. China reported more and more COVID-19 cases everyday.
Besides that, oil refining in China has been asked to decrease the Saudi Arabian crude oil volume in December. Reuters also reported that for a moment it was slowing down the oil purchase of Russia.
While COVID-19 case weight in China is smaller than other countries, the biggest crude oil importer in the world maintained it’s tight policy to redeem the initial pandemic.
The Hawkish Comment has an Impact on Dollar
That reduced the fuel demands. On Thursday, the USD raise because of the US treasury Yield result which were increasing too. Besides that, market also learned about the hawkish comment from the Federal Reserve representative.
Elsewhere, pound staring declined because market was not impressed by the new budget from the UK government. Greenback was rebound for a little after it felt for some weeks lately.
The causes were the inflation data and statements made by the Fed Policy Maker. Those has been triggering speculation that the US central Bank can slow down their interest rate increase speed.
However, at a moment on Thursday, James Bullard showed a graphic. That graphic displayed that at least the interest rate can increase by 5%. However, a tighter assumption said that it will be more than 7 percent
Some People doubt that Bank will change It’s Direction
Bullard talked a day after Mary Daly as the Fed San Francisco have her comment. For your information, Daly is one of the most dovish representatives right now.
That add a doubt about the direction change from central bank by saying that intervals are impossible to happen. Bechtel as an analyst noted the Sterling step on Thursday.
He also said that market participants are not comfortable about the budget made by Jeremy Hunt as the financial minister of United Kingdom. What are those budgets?
Those are included the tax increase and tighter public expense. The aims are for cooling down inflation and recovering the country’s economy reputation.
Meanwhile, gold’s price is still High
In the other places, gold’s price is still near it’s highest level for three weeks. Meanwhile, the market focus is in the tension in Poland and come back to a possibility of Federal Reserve interest rate raise.
The news about geopolitical tension only give a small effect for gold. It was said by Daniel Ghali as a commodity expert in TD securities.
Furthermore, he stated that there is a possibility that market will be calmer before an updated news about inflation happened in the United States. That faded tension is followed by less desire of people to dollar.
At last, this thing will make gold is cheaper for those who don’t own the USD. Market also sees the retail sales in America which is higher than expectation in October.
