WTI crude is below the April 9 low of $55.12 as today’s rout extends. Oil is down $1.75 on the day at $55.08, which is the worst since April 2021.
The market is sensing a growing chance of peace in Ukraine, something that will allow Russian oil to flow more freely. There are also persistent (and well-founded) concerns about oversupply this winter after the series of production hikes from OPEC.
The good news is that this is deflationary and will give central banks more leeway to cut rates or keep the low. The bad news is that $55 oil is unsustainable and will lead to decreased investment that will eventually show up in higher prices, creating inflation.
