Oil musters second-day of gains as rate-hike fears jolt markets
BNN Bloomberg
Oil barely squeaked out a second day of gains in a volatile session, withstanding risk-off sentiment in broader markets as traders sought refuge in commodities as a hedge against inflation.
Oil barely squeaked out a second day of gains in a volatile session, withstanding risk-off sentiment in broader markets as traders sought refuge in commodities as a hedge against inflation.
West Texas Intermediate futures closed up 0.3 per cent after climbing as much as 2.3 per cent earlier on Thursday in New York trading. Economic data showed that U.S. inflation surged to a four-decade high, prompting Federal Reserve Bank of St. Louis President James Bullard to advocate for a supersized rate hike. While equities declined on the day, oil is viewed as a safer bet amid rising cost pressures.
“When you have an inflationary period, that’s generally good for commodities,” said Stewart Glickman, energy equity analyst at CFRA Research in New York. “As a physical commodity, oil tends to hold its value better. Oil and gold are now seen as safer havens while other assets are being inflated out.”
Along with the macro-economic factors that were driving volatility, investors are keeping a keen eye on talks aimed at reviving a nuclear agreement with Iran, which could add more crude to the global market. A deal that addresses the concerns of all sides is in sight, White House Press Secretary Jen Psaki said Wednesday.
Geopolitical tensions in Eastern Europe are also being monitored as the U.S. and its allies warned of a buildup of close to 130,000 Russian troops near the Ukrainian border. Moscow has repeatedly denied it plans of attacking its neighbor.
