Markets updates: oil at lowest point in two months a head of Fed meeting

Oil continues its decline for the third week in a row

By Laila Eid | @Laila Eid | 3 July 2023

  • The US dollar started its movements today with a negative price gap

  • Gold broke the $2,000 barrier during yesterday's trading

  • West Texas crude recorded a decline of more than 5% during yesterday's trading

WTI hits its lowest level since march, Amidst Interest Rate Concerns

West Texas crude has continued its decline for the fifth consecutive session, reaching its lowest level since March and falling below $70 per barrel for the first time since late March. Yesterday's trading saw a negative performance of more than 5%, which is the largest decline since September 2022. The price gap was created even after OPEC+ announced a reduction in production by more than one million barrels, starting from the beginning of May.

The massive drop was mainly attributed to economic growth concerns after a report on Sunday showed Chinese manufacturing activity unexpectedly declined in April, which was the first decline since December.

Meanwhile, Brent crude reached the region of $73 per barrel, coinciding with the approaching announcement of the federal interest rate and concerns about the health of the banking sector. This is a move to get rid of risky assets, and assets that rely on economic activity, like oil.

markets saw the release of several important economic data

starting with the US jobs report for the private sector from ADP, which indicated that the economy added about 296 thousand jobs, which is the highest since June 2022, compared to expectations of just 145 thousand jobs. On the other front, the number of vacancies in the United States fell by around 380,000 to reach 9.6 million last March, which is the lowest level since April 2021. The US jobs report issued by the Bureau of Labor Statistics is scheduled to be released on Friday, and expectations indicate an increase in the unemployment rate from 3.5% to 3.6% in April, and the addition of about 179,000 jobs, compared to 236,000 in March.

US Federal Reserve Set to Raise Interest Rates for Third Time This Year

Today, all eyes are on the US Federal Reserve meeting, and the announcement of the Federal Funds Rate. Expectations indicate that it will be raised by 25 basis points for the third time this year, bringing it to the range of 5.00% - 5.25% for the first time since 2007. Some reports indicated that bets have increased about a halt to raising interest rates in June, as the vast majority of investors believe that today will be the last hike, before fixing it at this level until the end of the year.

On the other hand, the US dollar declined during today’s trading until the issuance of this report, by 0.30%, below the level of 102.