A massive surge in yields and the oil market continues to hold a strong position

There are many factors that affect the economy of the nation. Factors such as inflation can influence the sentiments of the investors. There was good news from the treasury market, where the two-year yields topped with a growth of 3%. The growth of this level has not been seen for the last fourteen years. The investors are also concerned about Fed hikes. There is a possibility that three half-point increases might take place during the month of June, July and September policy meetings. There is a clear signal from the central bank that it is likely to raise rates by 50 basis points by next week.

Growth of 1% was seen in the consumer price index in comparison to the previous month and on an annual basis, it was 8.6%. The largest contributors were gas, food and shelter. CPI that does not include volatile energy and food components registered a growth rate of 0.6% in comparison to the last month and 6% from the previous year. The financial experts are aware that Wall Street weighs in on stocks, rates and inflation.

The effect of international incidents on oil prices

China and the United States are the largest consumers of oil. During the driving season, more Americans are on the road. Currently, the Americans pay a big sum of money for gasoline. A large sum of money is spent to fill the fuel tank of a normal car. Oil has been trading around $120 a barrel for a very long time despite the fact that China is not consuming oil in very large quantities. Even veteran oil consultants are surprised over the combination of circumstances. Most of the economies are in a strong position and minor fluctuations of the Chinese economy are under control.

The officials of the OPEC+ have already announced that they have very little extra capacity to add. There are other factors helping the growth of fuel prices. After the Russian invasion of Ukraine, several countries around the world have slapped Russia with sanctions. This step has seriously disrupted the availability of fuel and crude. As the consumption of the refined products is outpacing the production, the inventories are depleting at faster speed. Such factors affect the price of the fuel as well.

Goldman Sachs Group Inc has announced that it expects Brent to touch the peak figure of $140 a barrel in the near future. The record of Brent was set in July 2008 when it touched the figure of $147.50. According to the estimate of China National Petroleum Corp, the petrol consumption of the country could jump by 12% in the third quarter. The chief oil analyst is declaring that the oil prices are already $120 a barrel when even China’s consumption is low. So, when China starts its normal consumption, the oil prices will go higher. The demand for oil will not come down because people are willing to travel and ready to pay higher prices. Many governments around the world are also giving subsidies on prices. Due to these subsidies or reduced taxation, the demand is increasing.

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