International oil prices in August registered their worst monthly performance since November 2021, due to the strong volatility generated by economic uncertainty about a possible global recession and the high interest rates registered by the most important central banks to contain inflation.
In the month, the West Texas Intermediate (WTI) generated a drop of 9.5%, reaching a price of 89.3 dollars per barrel. On the other hand, Brent decreased 13.2%, trading at 95.48 dollars per barrel.
Oil extended losses after falling more than $5 a barrel early on Wednesday, although prices were supported by industry data that showed US fuel stocks declined more than expected.
The high interest rates of the central banks have a significant impact on the demand for fuel, since the main objective is to limit consumption, including oil. In addition to this is added the concern about the impact that the cooling of the economy may have on the demand for energy.
“The price of crude oil has fallen due to investor concerns about the poor state of the world economy, bearish signs of demand for oil from OPEC and greater restrictions to curb covid-19 in China. Fears of tighter monetary policy weigh on growth and China presses ahead with its Covid Zero strategy,” analysts at Hammerstone Markets said.
In the morning, the OPEC report showed that the oil market will register a small surplus of 400,000 barrels per day in 2022, much less than previously forecast, according to sources in the organization, due to lower production by the members of the group. However, OPEC said it is willing to cut output amid volatility in the futures market, fueled by low liquidity and a disconnect with physical markets, Saudi Energy Minister Prince Abdulaziz said last week. bin Salman.
Another big factor for oil prices came when Russia halted gas supplies through a major pipeline to Europe for three days of maintenance amid fears it might not resume, adding to concerns about the power rationing in the winter months in some of the richest countries in the region.
The Mexican mixture closed on August 30 at a price of 88.65 dollars per barrel, which meant a monthly drop of 9.8%, following the same trend with its peers in the United States and the United Kingdom.
“Downside pressures continue to be related to concerns about economic activity, especially given the increase in the reference rate in the United States, which may lead the economy to slow down, while it is feared that the economy of Europe falls into recession due to the energy crisis,” said Gabriela Siller, director of economic analysis at Banco Base.
He added that volatility is expected to persist as supply shortages continue, as well as international risks, including the possibility of a global recession, inflationary pressures, restrictions on mobility in China and the war in Ukraine.
What about other commodities?
Gold prices fell on Wednesday and headed for their longest monthly losing streak since 2018, pressured by expectations of more interest rate hikes by central banks to combat soaring inflation.
Spot gold was down 0.63% at $1,712.56 an ounce at around 2:30 p.m. Bullion is down about 3.9% so far in August, marking its fifth straight month of declines, the longest in nearly four years.
Specialists attribute this negative behavior to the environment of high interest rates, since gold is a safe investment during economic and geopolitical crises, but with more and more increases by central banks, it is less attractive for investors because it does not offer returns.
“It is becoming increasingly clear that central banks are going to be aggressive with tightening due to unprecedented inflationary pressure, which is not good for gold,” said Edward Moya, senior analyst at Oanda.
Spot silver fell 1.6% to $17.87 an ounce, and has lost 11.5% this month. Platinum was down 0.6% at $842.30. Palladium lost 0.7% to $2,072.53.
U.S. corn futures fell for a second straight session on Wednesday on month-end profit-taking and growing recession concerns, but the market was on track to close the month with a strong monthly gain on less-favorable prospects for U.S. corn. crops in the United States and Europe.
December corn in Chicago was down 7.5 cents at $6.6975 a bushel. November soybeans were down 9.5 cents at $14.23 a bushel, while CBOT December wheat was up 12.5 cents at $8.33 a bushel.
With information from Reuters
