Low inventories are like a talisman, high interest rates are like chronic medicine: who should oil prices listen to first?

The most dramatic thing about the crude oil market is that it always faces two forces at the same time: one is visible geopolitical risk, and the other is invisible but more persistent macro pressure. Now that WTI has fallen below 90 USD and Brent is moving down in sync, after the White House denied the US-Iran memorandum of understanding, the market did not overreact; instead, it shifted its focus to how high interest rates suppress demand.

The damage of high interest rates lies in its “slow” effect. It won’t cause oil prices to surge and crash immediately like a war would, but it will gradually weaken economic activity, making demand less strong. The problem is that low inventories are like a talisman too, telling the market: don’t be too optimistic. Once something goes wrong on the supply side, prices will still be lifted quickly. As a result, oil prices fall into a very typical state—they want to drop, but can’t drop comfortably; they want to rise, but can’t rise smoothly.

So in the short term, oil prices are more likely to keep probing back and forth between pressure and support. If subsequent macro data continues to skew weak, oil prices may test lower again; however, as long as inventories do not show a clear rebound, prices will be hard to truly lose the bottom support. For traders, this kind of market is the most annoying, because it neither gives you the satisfaction of a big drop nor the thrill of a major rally—only a test of patience with repeated side-to-side swings.
#WTI原油失守90美元