Recession Fears Spark Oil & Gas Exodus, Energy Exploration Stocks Enter Bear Market

Anxiety over a Fed-induced US recession – as the central bank battles stagflation – have prompted a plunge in prices in the energy complex.

With Atlanta Fed’s GDPNOW model now forecasting a recession has started – and inflation expectations rising – FedSpeak this morning confirmed their hawkish commitment to ‘whatever it takes’ to slay the inflation dragon, whether that means sparkjng a recession or not…

WTI prices fell back below $110, but remain above the Biden SPR plan levels…

Wholesale Gasoline prices are down hard this morning also…

The SPDR S&P Oil & Gas Exploration & Production ETF dropped 7.2% (entering bear market territory) and is on pace to fall for an eighth day, which would mark its worst string of declines since June 2020.

The S&P 500 Energy Index is down 16% this week and on pace for its worst weekly decline since March 2020’s COVID lockdowns.

While demand is expected to grow (as China re-opens), supply remains considerably restrained (and Biden’s muling of export bans are unlikely to help that supply situation), however, all the monetary jawboning this week has refocused traders in the short-term…

“Oil markets have focused on macro this week,” said Keshav Lohiya, founder of consultant Oilytics.

“However, we wonder what 25 basis point or even 50 basis point increases will do when the bulk of the inflation is coming from commodities.”

As the war in Ukraine continues, the focus remains on the extent to which Russian oil flows will be altered. On Friday, the country’s Deputy Prime Minister Alexander Novak said throughput at the nation’s refineries could fall 10% this year.