Will Oil Prices Cool on Higher Inflation? Date: June 30th

The markets are ending H1 in a nervy manner, with risk assets beginning to make another move lower. As recessionary fears grow, will oil prices slip lower？

Inflation continues persistent nature

Looking at the themes dominating the markets at the moment, and one will likely stick out to all of us. That is inflation, which is impacting pretty much everything at the moment. Demand prospects have picked up massively since the pandemic, and although they still remain robust, traders are wondering whether inflation is now really starting to hit the consumer. Could this reduce oil demand and therefore relieve the price？ Its certainly an interesting debate, as oil is price inelastic in demand. Therefore, demand is less responsive to changes in price.

Recession to drive oil price down？

Finally, the current drop in oil is fueling recession fears. In a time of recession, consumer demand sinks and therefore so does the price of oil.

Scenario 1: Oil prices react from the hourly order block, targeting the highs at $114 per barrel.

Scenario 2: Oil prices break the hourly order block, retest the new mitigation level, and test the lows of $101 per barrel.

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