The Washington Examiner reports that the price of oil fell by about 6% on Friday.
“Futures for the international benchmark Brent crude fell Friday by as much as $6.69 before settling around $113.68 a barrel,” the outlet reports.
It continues, “futures for U.S.-based West Texas Intermediate crude dropped to less than $110 a barrel — a 6.8% decline and the largest single-day decline since March.”
This puts the price of oil at a four-week low. It marks a significant change from the intervening weeks, which saw the price of oil steadily rising.
One can’t ignore the timing of this dropoff. It came within days of the Federal Reserve’s interest rate hike – the largest of its kind in almost three decades.
The purpose of the hike is to reduce the staggering inflation that Americans have been witnessing over the past year. That inflation reached a 40-year-high last month leading to fears of a recession.
The big question now is what effect the Fed’s interest rate hike will have on the U.S. economy. It’s not an easy question to answer. But, it’s clear that optimism does not appear to be at an all-time high among the experts.
As for where oil is going, the Examiner quotes Edward Moya, a senior market analyst at OANDA.
“The oil market looks like it won’t be tight for much longer as demand destruction calls grow as aggressive central bank tightening will lead to a short-term economic downturn,” Moya said.