While Stratas Advisors said in its latest oil price forecast that they are less concerned about the talk of price caps at the G7 meeting, the firm is increasingly concerned about the risk of further escalation of the Russia-Ukraine conflict because of several developments.
“The Fed was talking very hawkish which was undermining the oil rally, but sentiment is changing a little especially on strong economic data,” said John Kilduff, partner at Again Capital LLC in New York.
The Biden White House's testy relationship with the fossil fuel industry has grown even more complicated as Russia's invasion of Ukraine cut global energy supplies and sent crude oil and natural gas prices skyrocketing.
The U.S. Energy Information Administration figures showed a capacity decline of 125,790 barrels per day last year.
For most non-U.S. airlines, the hit from rising costs far exceeds the benefit from ticket sales to U.S.-based customers converting to more local currency.
Yellen said a price exception is an effective cap that could be achieved by restricting insurance or financing for Russian oil shipments above a certain amount.
While the oil prices declined last week, the price movement remains on the upward trend that started in December of last year. However, will the trend hold? Stratas Advisors explores in its latest oil price forecast.
With the Fed expected to keep raising interest rates, open interest in WTI futures on the Nymex fell on June 16 to its lowest since May 2016 as investors cut back on risky assets.
Despite the outlook for continued economic growth and rising oil demand this year, OPEC also warned of significant downside risks.
After an early selloff, buyers jumped back into the market as most forecasters expect oil supply to remain tight for several months.