- Federal Reserve officials raised interest rates by 75 basis points for the second straight month
- Chair Powell said that the Committee will now make decisions on a meeting-by-meeting basis rather than providing the kind of clear guidance it provided for the last two meetings
- Powell also said the Fed would slow the pace of increases at some point and added that another 75bp hike remains on the table
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The U.S. economy contracted for the second consecutive quarter, confirming a recession, depending on your definition
- GDP dropped at a 0.9% annualized rate after a 1.6% decline in the first quarter of the year, according to the Commerce department
- Historically GDP and crude oil consumption have a good correlation, and the print could be a sign that crude consumption growth is slowing
- Global crude consumption usually grows at around half the rate of the economy, and we have been warning of the risks posed by a recession. Prior to COVID, the last time the U.S. economy posted two consecutive quarters of negative GDP growth ('08-'09), U.S. crude consumption fell by 2.65 MMBbl/d
- The U.S. is exporting more oil than ever before, with shipments poised to climb even higher
- Crude shipments rose 21% last week to an all-time high of 4.55 MMBbl/d, according to EIA
- On Wednesday, the WTI was trading at more than $9 below Brent, and this widening gap may allow traders to make more profit from each American barrel sent to energy-scarce Europe and other regions
- Brent oil prices have remained high, and the demand for U.S. crude has increased due to tight supply in Europe as a result of Russia's growing isolation
- WTI prices have also been restrained by releases from the U.S. strategic petroleum reserve