Aggressive Monetary Tightening Dampened Brent Crude Oil Forecasts, Silver Futures Falling, Corn Futures

Summary:

• Brent crude oil dropped for their third consecutive week.
• Higher-than-anticipated US inflation fueled concerns that the Fed might raise interest rates quicker.

Brent crude oil faced 3 weeks of declines

After three weeks of falls, Brent crude futures dropped below $91 per barrel on Monday as aggressive monetary tightening and recession worries dampened the forecast for demand before the European Union's embargo on Russian oil in December. Investors are getting ready for a flurry of interest rate announcements this week, led by the US Federal Reserve, which is anticipated to deliver another enormous rate hike to fight inflation. The top crude importer in the world had a wider opening when Chengdu, a city in China, removed a two-week lockdown. For the first time in three weeks, US energy companies added oil and natural gas rigs last week, signaling a future with higher output on the supply side. In Europe, as the country struggles with a deepening energy crisis that threatened to plunge the eurozone into a recession, Germany seized the local branch of a significant Russian oil refinery.

✕ Brent Crude Oil Futures Price Chart

Silver prices trading below 4 weeks highs

Silver futures were trading at $19.5 per ounce, remaining below the nearly four-week high of $19.8 reached on September 12 as higher-than-anticipated US inflation fueled concerns that the Federal Reserve might raise interest rates more quickly than anticipated, leading investors to the US dollar rather than non-yielding bullion investments. Speculations that the US central bank would give a more aggressive 100bps increase in its funds rate next week were sparked by worries that price rise may not have peaked yet, boosting predictions that borrowing might go to as much as 4.3% in early 2023. The European Central Bank (ECB) indicated it will keep raising interest rates after its September meeting, which saw a 75bps increase. According to Bank of France president Villeroy, as policymakers work to reduce inflation from its current historically high levels, borrowing prices in the bloc may approach a neutral level by the end of the year.

✕ Silver Dec ‘22 Futures Price Chart

Corn

Trading on a contract for difference (CFD) that reflects the benchmark market for this commodity shows that corn has gained 78.71 USd/BU or 13.27% since the start of 2022.

✕ Corn Dec ‘22 Futures Price Chart

Sources: finance.yahoo.com, tradingeconomics.com