Home NewsBusiness News Oil Falls Below $100 Per Barrel For First Time Since May As ‘Strong Likelihood Of Recession’ Hurts Demand

Oil Falls Below $100 Per Barrel For First Time Since May As ‘Strong Likelihood Of Recession’ Hurts Demand

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Oil Falls Below $100 Per Barrel For First Time Since May As ‘Strong Likelihood Of Recession’ Hurts Demand


topline

Oil prices fell 9% on Tuesday — below $100 a barrel for the first time since May — as some experts warned they could fall to $60 a barrel by the end of the year if a recession severely dampens demand.

key facts

U.S. benchmark West Texas Intermediate crude fell about 9 percent to around $98 a barrel, while international benchmark Brent crude was trading just above $102 a barrel.

The last time oil prices dipped below $100 a barrel was in early May — and while prices rose from there, WTI and Brent both posted their first losses in six months in June as experts fear a recession will hurt global demand.

Although prices have slowed in recent weeks, oil prices have risen nearly 15 percent this year — reaching a high of nearly $140 a barrel in early March after Western countries approved Russia for energy imports, even as the country continues to sell oil to China and India. sell its supply.

With oil currently hovering around $100 a barrel, some strategists are predicting more pain later in the year: Citi analysts say that if the economy does slip into a recession, oil will fall to around $60 by the end of 2022.

Falling demand and a supply glut could hurt prices as the economy “increasingly” declines, Citi strategists said in a report on Tuesday, arguing that Brent could fall to $65 a barrel by the end of the year. , and could drop to $45 in 2023.

Even with the recent decline, some experts remain bullish: “Recession fears are killing the crude demand outlook, but with prices down about 17% from their March highs, oil shouldn’t drop too much,” Oanda Senior Markets Analyst Edward Moya said.

What to look out for:

According to a recent report from Ritterbusch and Associates, the “tightening” in global energy markets is being offset by “a strong possibility of a recession,” which, combined with a surge in prices earlier this year, has begun to “depress oil demand.”

Key Quotes:

Oil prices are “extremely weak” as investors are “increasingly pessimistic about the economic outlook,” said founder of Vital Knowledge, still caught in a “tug-of-war between supply and growth concerns, while Europe continues to face significant gas price risk” Adam Crisa Fuli.

Tangent:

The euro fell to a fresh 20-year low against the dollar on Tuesday. The currency took a hit as central banks scrambled to raise interest rates as Russia’s soaring gas prices amid the Ukraine war fueled recession fears. Inflation in the euro zone has soared – hitting a record 8.6% in June – amid Western sanctions on Russian oil and gas. At the same time, the dollar remained strong even as the Federal Reserve also raised interest rates to cool soaring consumer prices. Mark Zandi, chief economist at Moody’s Analytics, said it now appears that “Russia’s war in Ukraine is never-ending” and that the associated surge in oil and other commodity prices has “caused a distressing global impact.” high inflation”.

Further reading:

Dow falls 600 points, yield curve inverts again, global recession fears ‘front and center’ (Forbes)

Stocks close on worst first half since 1970 (Forbes)

Warren Buffett’s favorite stocks soar, Netflix fails: These are the best and worst performers in 2022 (Forbes)

Warren Buffett Adds Big Stake in Occidental Oil, Buys on Dips After Oil Falls (Forbes)

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