InvestorQ : Why did Crude oil bounce back above $100 per barrel after falling?
Ria Jain made post

Why did Crude oil bounce back above $100 per barrel after falling?

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Dia Deshpande answered.
1 month ago
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Even as Europe faces a severe energy crisis, Saudi Arabia has given a boost to oil prices by hinting that OPEC may cut supplies. The idea would be more to align the demand and supply closer. Saudi Arabia fears that due to recessionary conditions in Europe and China, oil demand could be dented. Hence too much supply could negatively impact oil prices. Last week, Brent had touched a low of $92/bbl before bouncing back to well above $102/bbl. This is a far cry from JP Morgan warning of crude oil at above $300/bbl.

Russian supplies still hold the key. Oil is already down 25% from the peak of the early part of this rally in March when crude scaled $140/bbl. So oil producers like KSA are obviously worried. On the other hand, recession fears are also worrying the oil producers as it has the ability to crack prices really fast. China is also adding to the uncertainty with flat to tepid growth. The onus will now be on how the likes of Trafigura, Vitol and Glencore manage the supplies of oil. They need to avoid too much of oil market disruption in the short run.

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