Medicare Agent News: Crude Oil Is 'Getting Crushed'

Tuesday, December 6, 2022

Crude Oil Is 'Getting Crushed'

By Alex Eule | Tuesday, December 6

Too Good to Be True. Last week, it seemed like stocks were finally turning a corner. On Wednesday, Federal Reserve Chairman Jerome Powell suggested rate hikes were set to slow and stocks surged. It's been all downhill since. Today, the S&P 500 slid for a fourth consecutive session, down 1.4%. The Nasdaq Composite was off 2%.

The problem is there's still enough good news to eventually mean more bad news. Since Powell's comments at the Brookings Institution last week, the jobs report has revealed a stronger-than-expected labor market, while the services sector has continued to grow, according to yesterday's report from the Institute for Supply Management. The good news means peak rates and eventual cuts might not be coming as fast as investors would like. And higher rates don't leave much room for error, once the economy really starts to slow.

"Recent market reaction to good economic news has been to interpret it as bad news for equities and bonds since the Fed is less likely to be able to pivot to a more accommodative stance in the near term," Mark Haefele, chief investment officer at UBS Global Wealth Management, wrote today. "...we think GDP growth is likely to slow further next year as the cumulative impact of Fed rate hikes weighs on activity."

CEOs sound increasingly worried about that issue, with layoffs starting to pile up beyond just the tech sector, including the latest job cut announcements this week from PepsiCo and Morgan Stanley. Earlier today, JPMorgan CEO Jamie Dimon warned about a "mild or hard recession" on CNBC.

The worries are weighing on energy markets, as well, with crude oil falling another 3.5% today to $74.25 a barrel, its lowest settle since Dec. 23, 2021. Crude is down 40% from a March 2022 high.

"It seems to have happened quickly but the crude demand outlook is getting crushed as we are in a slowdown basically across all the major economies," Oanda analyst Edward Moya writes. "Supplies seem plentiful over the near-term and that has everyone hesitating on what was one of the easiest trades of the year."