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Oil falls nearly 2% as recession fears outweigh potential supply shortages By Reuters

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© Reuters. FILE PHOTO: The OPEC flag appears on the day of the OPEC+ meeting in Vienna, Austria, October 5, 2022. REUTERS/Lisa Lautner

Written by Laila Kearney

NEW YORK (Reuters) – Oil prices fell nearly 2 percent on Monday after five consecutive sessions of gains, as investors worried that the pull of the economic storm could herald a global recession and reduce demand for fuel.

Futures settled at $96.19 a barrel, down $1.73, or 1.8%. West Texas Intermediate crude settled at $91.13 a barrel, losing $1.51 by 1.6%. Both benchmarks rose over the past week largely on the back of expectations of tight global supplies.

Oil prices fell amid comments by Federal Reserve officials about rising interest rates and their impact on the economy.

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Fed Vice Chairman Lyle Brainard said the economy is beginning to feel more restrictive monetary policy, but the full burden of higher interest rates by the central bank will not be clear for months.

Brainard’s comments came on the heels of comments by Chicago Fed President Charles Evans that there was a strong consensus in the Fed to raise the policy rate target to around 4.5% by March and keep it there.

“There is more agony and gloom from these people and what they are going to do to the economy, because they are not fully convinced that inflation is under control, and that is the whole game that affects oil,” said John Kilduff. , a partner at Again Capital LLC in New York.

Oil prices also suffered as the US dollar rose, which rose for the fourth session. A strong dollar makes crude oil more expensive for non-US buyers. [USD/]

The prospect of tightening OPEC+ oil supplies limited the price decline. The Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, better known as OPEC+, decided last week to cut production target by two million barrels per day.

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But indications that Saudi Arabia, the de facto leader of the group, will continue to serve Asian customers at full levels, have lowered expectations about the impact of the cuts.

Aramco Saudi Arabia At least seven clients in Asia (Tadawul) said they will receive full contract volumes in November before the peak of the winter season, several sources familiar with the matter said.

“The OPEC + decision … will have a mild impact on the oil supply market as actual production cuts will be smaller,” said Fitch, noting that the combined group is already producing less than its previous quotas.

Brent and West Texas Intermediate posted their biggest weekly percentage gains since March after the cut was announced.

However, the cut spurred a flurry of activity in the options market – but with more US bettors opting for a bearish stance, data from CME Group (NASDAQ:) showed.

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Concerns about demand remain relatively strong as the pandemic subsides, exacerbating scarce supplies as the European Union late last week backed a G7 plan to impose a price cap on Russian oil exports.

Analysts have warned that the complex new sanctions package could end with a shutdown of large supplies of Russian crude.

Meanwhile, services activity in China during September contracted for the first time in four months as COVID-19 restrictions affected demand and business confidence, data showed on Saturday.

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Bitcoin plunges 70% on Standard Chartered’s list of potential disruptions for 2023

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(Bloomberg) — Speculators clinging to the view that the cryptocurrency’s path is over are mostly at risk of a rude awakening in 2023, according to Standard Chartered Bank.

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Another “surprising” scenario that markets could be “underpriced,” Eric Robertson, the bank’s global head of research, wrote in a note Sunday, another bitcoin drop of about 70% to $5,000 next year.

Robertson said demand could shift from bitcoin as a digital version of gold to real gold, leading to a 30% rally in the yellow metal.

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Robertson added that this likely outcome includes a reversal in higher interest rates as economies struggle, more bankruptcies and a collapse in investor confidence in digital assets.

He stressed that he was not making predictions but instead summarizing scenarios that are materially outside the current market consensus.

Arguably, the question of what lies ahead for digital assets wasn’t difficult to answer after the collapse of Sam Bankman-Fried’s FTX exchange and sister trading house Alameda Research. The spreading tremors from the explosion threaten to bring down more crypto companies and token prices.

For some, much of the bad news may already be reflected in the more than 60% drop in bitcoin and a scale of the top 100 tokens over the past year.

“Our bottom line is that most of the forced selling is over, but investors may not be compensated for the market risk incurred in the near term,” Sean Farrell, Fundstrat’s head of digital asset strategy, wrote in a note on Friday.

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Farrell pointed to the ongoing uncertainty surrounding Digital Currency Group, the parent company of beleaguered crypto brokerage Genesis. Genesis creditors are looking at options to try to prevent the brokerage from falling into bankruptcy.

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Robertson of Standard Chartered said that a surprising market scenario of gold rallying as cryptocurrencies decline could see the precious metal measure at $2,250 an ounce.

“Gold will benefit from cryptocurrency woes going forward, with the sudden downturn in confidence in the cryptocurrency ecosystem,” said Nicholas Vrabel, global head of institutional markets at ABC Refinery in Sydney.

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The cryptocurrency sector continues to shrink. For example, digital asset exchange Bybit plans to cut its workforce by 30%, the latest in a series of layoffs to hit the industry.

There could be more pain ahead: About 94% of respondents to Bloomberg’s MLIV Pulse survey believe more blowouts will follow FTX’s bankruptcy as years of easy credit give way to a tougher business and market environment.

Bitcoin at the moment is fairly stable. The largest virtual currency was up 1.8% on Monday and was trading at a three-week high of $17,340 as of 2:35pm in Tokyo. It also gained codes like Ether, Solana, and Polkadot.

For crypto market prices: CRYP; For the most important cryptocurrency news: TOP CRYPTO.

–Assisted by Sing Yee Ong.

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Dollar falls as easing of restrictions in China boosts risk sentiment By Reuters

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© Reuters. FILE PHOTO: One hundred US dollar banknotes are seen in this illustration taken in Seoul on February 7, 2011. REUTERS/Lee Jae-won/File Photo

SINGAPORE (Reuters) – The dollar fell broadly on Monday after a rough week, weakening below 7 yuan as sentiment towards riskier non-dollar assets improved after signs of China easing some coronavirus-related restrictions.

More Chinese cities, including financial hub Shanghai and Urumqi in the far west, announced easing coronavirus restrictions over the weekend as China tries to soften its stance on COVID-19 restrictions in the wake of unprecedented protests against the policy.

“They may seem like small steps, but nonetheless they are a strong sign that China is taking measured steps toward reopening,” said Christopher Wong, currency analyst at OCBC.

China is preparing to announce soon easing nationwide testing requirements, as well as allowing positive cases and close contacts to isolate at home under certain conditions, people familiar with the matter told Reuters last week.

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The dollar fell below 7.0 yuan in foreign trade, while it jumped about 1.4% to 6.9507 on Monday morning, the strongest level since Sept. 13.

The euro, which measures the currency against six major peers including the yen and the euro, fell 0.18% to 104.28, its lowest since June 28.

The index fell 1.4% last week, capping a 5% decline for November, its worst month since 2010, on mounting expectations that the Federal Reserve is ready to scale back interest rate hikes after four consecutive 75-bps. Points increase.

Investors’ focus will be on US consumer price inflation data due on December 13, a day before the Federal Reserve wraps up its two-day policy meeting.

The US central bank is expected to raise interest rates by an additional 50 basis points at the meeting. Fed fund futures traders are now pricing the Fed’s benchmark rate to a peak of 4.92% in May.

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OCBC’s Wong said some degree of caution is still warranted because the Fed is not done tightening. “They’re still tightening up, it’s just that it’s going to be in baby steps.”

Traders appeared to be looking beyond the stronger-than-expected US jobs report for November on Friday after some Federal Reserve speakers calmed market concerns.

“We’ve blown past the US payrolls with a temporary jolt to risk markets,” said Chris Weston, head of research at Pepperstone, noting that the data supports the “soft landing” argument and is unlikely to change the Fed’s course.

Meanwhile, the Japanese yen was down 0.04% against the dollar at 134.37 per dollar, after rising 3.5% last week, off October’s low of 151.94.

The euro rose 0.38% to $1.0578, after rising 1.3% last week. It had earlier touched its highest level in more than five months at $1.05835.

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The pound rose to $1.23450, the highest level since June 17, and was last trading at $1.2339, up 0.42%.

The Australian dollar rose 0.75% to $0.684, while it rose 0.31% to $0.643.

================================================== == ======

The currency bid prices are at 0520 GMT

Description RIC Last US Close Pct Change YTD Pct High Bid Low Bid

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previous change

session

EUR/USD 1.0580 $1.0541 +0.37% -6.94% +1.0584 +1.0512

USD/JPY 134.3800 134.2950 +0.00% +16.75% +134.7600 +134.2800

EUR/JPY 142.18 141.53 +0.46% +9.10% +142.2200 +141.5700

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USD/CHF 0.9349 0.9368 -0.19% +2.51% +0.9393 +0.9344

GBP/USD 1.2337 1.2293 +0.37% -8.76% +1.2343 +1.2251

USD/CAD 1.3401 1.3474 -0.54% +5.99% +1.3473 +1.3386

AUD/USD 0.6841 0.6794 +0.63% -5.94% +0.6851 +0.6764

NZ 0.6429 0.6413 +0.27% -6.06% +0.6442 +0.6367

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The Dow shines as tech stocks squeeze higher on the Nasdaq

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The Dow Jones Industrial Average is outperforming the broader S&P 500 to an extent not seen in nearly a century.

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