On June 15, international crude oil futures fell. The settlement price of the main contract of WTI crude oil futures in the United States was US $115.31/barrel, down US $3.62 or 3.04%; The settlement price of the main contract of Brent crude oil futures was US $118.51/barrel, down US $2.66 or 2.20%. On Wednesday, the Federal Reserve announced an interest rate hike of 75 basis points higher than expected, which was the largest interest rate hike by the Federal Reserve in the past 30 years. The market was disturbed by macro bad news, and the expectations of demand setback put pressure on oil prices. Both WTI and Brent of international crude oil futures fell to a two-week low.

On Friday, the data released by the US Department of labor showed that the US consumer price index (CPI) rose by 1.0% month on month and 8.6% year on year in May, hitting a new high in 40 years. The expectation of the Federal Reserve’s interest rate hike brought the oil market back from its high point, and the international oil price returned to below $120. However, as the fundamentals of supply and demand have not changed, tight supply is expected to make the oil price relatively strong.

On Wednesday, the decline in oil prices widened, mainly due to the disturbance of the news that the Federal Reserve raised interest rates more than expected. On June 15 local time, the Federal Reserve announced that it would raise interest rates by 75 basis points to curb soaring inflation. This is also the largest rate hike by the Federal Reserve since 1994. The interest rate hike may have a negative impact on the economy. While curbing inflation, it may hurt demand, so it will bring upward resistance to the rising oil price.

Can oil prices return to the upward channel in the future?

On the supply side, under the background of the conflict between Russia and Ukraine, European and American oil sanctions against Russia will continue to reduce its supply. At present, the global market has reduced the supply of crude oil by about 2million barrels per day. And in the short term, the supplier is unable to make up for this loss. Although OPEC, the oil producing country, has increased its growth rate from 400000 barrels per day to 650000 barrels per day, and there are rumors of reserve release in the market, it is a drop in the bucket either from the poor residual production capacity of OPEC or from the short-term behavior of reserve release. Therefore, the medium and long-term supply pressure is still on, which still plays a strong supporting role in oil prices.

On the demand side, in the medium term, the peak driving season in summer in Europe and the United States will still bring a stable increase to the oil market. In addition, the epidemic situation in Asia has eased, and the relaxation of restrictive measures will also stimulate some demand. On the whole, short-term demand is still strong, which will also be good for oil prices, and the oil market will still return to the upward channel. In the medium and long term, under the background of high inflation in the United States, the Fed’s interest rate hike may further hurt demand. This will also bring uncertainty to the market. On the whole, oil prices are still strong in the short term. In the medium term, it may be affected by the global high inflation and the increased expectation of interest rate hike, or further hurt demand; In addition, in the long run, with the enhanced substitution of new energy for traditional fossil energy, the oil market is far from or under pressure.