West Texas Intermediate crude futures settled below US$100 on Tuesday after falling more than 8%, the most since March 9. Risk-on sentiment spread across markets on escalating concerns that a global economic slowdown will eventually dampen demand. Oil prices were prone to wild swings as traders fled for the exits after Russia’s invasion of Ukraine drained liquidity. The latest plunge came as stocks fell and the dollar soared. Citigroup Inc. said crude could fall to US$65 this year in the event of a recession. Oil prices have come under pressure in the past month as central banks aggressively raise interest rates. However, natural barrels command huge premiums. Saudi Arabia raised its official selling prices in Asia on Tuesday. Benchmark Arab Light crude will be US$9.30 above its regional benchmark in August, up US$2.80. “Crude oil prices have eased as worries about weakening demand begin to offset fears of tight supply,” said Fawad Razaqzada, market analyst at City Index. “A growing number of analysts expect that many of the world’s leading economies will experience negative growth in the coming months, and this will drag the US into recession.” Adding to recession fears, Shanghai began mass testing for COVID in nine regions after detecting cases in the past two days, casting doubt on a demand recovery in one of the world’s biggest oil-consuming countries. The additional tests raised concerns that more lockdowns could be implemented as the city reported several infections on Sunday and Monday. While futures have been pressured by the threat of a global economic slowdown, the market’s key time frames remain strong, indicating that there is steady demand for short-term supplies. A strike in Norway and a supply disruption in Libya have soured that strength of late. Prices:
WTI for August delivery fell US$8.93 to settle at US$99.50 a barrel in New York No settlement was made Monday due to the July 4 holiday Brent for September settlement fell US$10.73 to US$102.77 a barrel Brent is trading in a range above US$10, its longest since late March
In welcome news for Biden, US retail gasoline prices fell from a record high of more than US$5 a gallon in mid-June. The national average now stands at US$4.80 a gallon, according to the latest figures from the AAA auto club, after sliding for 21 straight days to its biggest loss in more than two years.
