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Gas prices are already climbing as OPEC+ announces a cut to oil production. Stocks dip slightly after a two-day surge, while investors and analysts warn of rising market stress. WTO slashes 2023 global trade forecast, and more financial news.
Higher gasoline prices already for the US and other countries after OPEC+, a group of oil-producing nations that includes Russia, voted to approve a significant cut in oil production, the New York Post reported.
According to Bloomberg, the reduction will mark the largest drop in OPEC+ oil production since 2020. CNN reported that the Biden administration attempted a “full-scale pressure campaign” in a bid to convince OPEC+ not to slash output to no avail. Oil climbed to $87 per barrel on Wednesday after the announcement. On Wednesday, gas hit $3.83, climbing another three cents on Thursday. As of Thursday, the US national average for a gallon of regular unleaded gasoline to $3.867, per AAA.
After a two-day surge, stocks took a slight dip on Wednesday, with the Dow losing a little more than 40 points, or 0.1%. The S&P 500 fell 0.2%, and Nasdaq dipped by 0.3%. The announcement of oil cuts by OPEC drove energy stocks higher, which helped to prop up the overall market. The top Dow stocks were Chevron (CVX), rising about 1%. Among the leaders in the S&P 500 were Exxon Mobil (XOM) and oil service giants Schlumberger (SLB) and Halliburton (HAL), with each stock gaining between 4% and 6%, CNN reported.
Investors and Wall Street analysts are warning of a potential “market accident” [read: market crash] as they observe successive bouts of turbulence in stocks and bonds, as well as the surging US dollar, all perpetuating levels of stress in the financial system, Financial Post reported. The Treasury’s Office of Financial Research (OFR) shows a “gauge of strain” for US markets that has risen to its highest level since the pandemic in May 2020. The OFR’s Financial Stress index is near a two-year high at 3.1, where zero denotes normal market functioning. This gauge is just one in a growing list of benchmarks suggesting trading conditions in U.S. government debt, corporate bonds, and money markets are increasingly stretched.
Based on the prospect of a looming global recession, as well as Russia’s war in Ukraine, the World Trade Organization (WTO) dramatically lowered its global trade forecast for 2023. The WTO said GDP growth for 2023 is now expected to be only 2.3 percent, down from earlier estimates of 3.2 percent. However, if the situation deteriorates, trade growth in 2023 could be as low as -2.8 percent.
“Today the global economy faces multi-prong crises,” WTO Director-General Ngozi Okonjo-Iweala told reporters while speaking in Geneva. “Monetary tightening is weighing on growth across much of the world.”
The WTO also says the rising costs of imports for fuel, food, and fertilizer will risk leading to more food insecurity and debt distress in developing countries.
