Oil prices decline on demand destruction
As per our previous article, the Saudis cut oil production, but the oil markets remain in a downtrend. This weakness is ominous and primarily reflects the demand destruction. In effect, the outlook for global growth has deteriorated due to the tightening of monetary policies in force. Central banks are desperate to reverse the fastest inflation since the early 1980s.
Moreover, China's covid lockdowns have hindered its economy. Given that it has been a major part of global growth in the 21st century, this has a ripple effect. But, perhaps, one of the biggest influences has been the strong dollar. Whilst a boon for US energy consumption, this impedes other countries whose currencies have devalued against the greenback.
These headwinds made the Saudi cut nothing more than a token price-support gesture. As a result, any brief rally in oil prices has faded, and the outlook continues to darken.
Russell Shor
Senior Market Strategist
Russell Shor is a Senior Market Strategist at FXCM, having been promoted to the role in 2025 in recognition of his depth of insight and consistent delivery of high-impact market analysis. He originally joined FXCM in October 2017 as a Senior Market Specialist.
Russell holds an Honours Degree in Economics from the University of South Africa, is a certified FMVA®, and a full member of the Society of Technical Analysts (UK). With over 20 years of experience in financial markets, his work is renowned for its clarity, precision, and strategic value across asset classes.
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