As recession fears grow, many Wall Street banks are lowering their forecast on oil
As recession fears grow, many Wall Street banks are lowering their forecast on oil
Last year at this time I was writing about inflation, pent up oil demand, and how JPMorgan is getting cash ready to invest at higher interest rates. Hindsight is always 20/20 and lets check, inflation… yes it is a problem, demand for oil has caused prices to rise as travelers are tired of being home due to COVID lockdowns. Many have said they aren’t caring about the price of gas they just want to get out and travel. Higher interest rates, yes they are upon us just in case you haven’t been paying attention.
Oil, lets talk about oil, and given the price for oil and gasoline these levels are not sustainable. Right now people have jobs, the economy is red hot, and there is still stimulus money out there. People are tired of being at home they are travelling this summer; all this causes the perfect storm for higher oil. These levels are not sustainable in the long term. Especially if the Fed is raising interest rates to tame inflation.
Citi is forecasting a rise in the possibility of a recession to around 50% chance. Corporations are starting to pare back hiring, and some have started to layoff workers. Higher interest rate will also help to cool off the economy, but this all adds up to a perfect storm of a recession. That being said oil at this level is not sustainable and I see what Citi is forecasting.
