Oil nosedives on recession fears
Crude prices gave up gains for the year falling below $80 a barrel for the first time since January
The price of oil has continued to decline, settling below $80 on Wednesday for the first time since early January. Economists attribute the fall to uncertainty over demand amid a global economic slowdown.
As of 14:40 GMT on Wednesday, benchmark Brent was trading at $79.86 per barrel, while US West Texas Intermediate (WTI) crude was at around $74.56.
According to experts, cited by OilPrice, sanctions imposed by the West on Russian oil had little impact on prices, unlike the global economic slowdown triggered by the energy crisis and grim recessionary forecasts for the world’s top economies.
Together those factors erased this year’s gains which saw prices advance above $100 per barrel in the spring, analysts said. The gap between the highest and lowest trades in oil prices reportedly reached $62 this year and was the biggest recorded in one year since the 2008 financial meltdown.
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“The crude demand outlook is getting crushed as we are in a slowdown basically across all the major economies. Supplies seem plentiful over the near-term and that has everyone hesitating on what was one of the easiest trades of the year,” senior market analyst at OANDA, Ed Moya, explained to OilPrice.
Other experts, however, pointed out that the market has overlooked threats to supply which could entail the EU price cap on Russian oil.
“We could be looking at $60-a-barrel WTI the way that things are going. I think $80s are going to be the new high, and I would be very surprised to see any higher than that,” senior market strategist at RJO Futures, Eli Tesfaye told Reuters.
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