Brent crude, the global benchmark, is down $7 at the settlement, down from $100 a barrel for the first time in 3 months.
-
The sharp drop in Brent crude came following volatile trading over the course of a month
Global benchmark Brent crude settled down $7 on Tuesday, falling below $100 a barrel for the first time in 3 months, as the dollar strengthened and Covid-19 restrictions dampen demand in China, the world’s largest crude importer, and on fears of a slowdown International Economy.
The sharp decline followed a volatile month of trading, amid concerns that sharp increases in interest rates to stem inflation would trigger an economic recession that would reduce demand for oil.
Brent crude futures closed down $7.61, or 7.1%, to $99.49 a barrel, its lowest since April 11. Meanwhile, US West Texas Intermediate crude fell $8.25, or 7.9%, to $95.84, its lowest level in 3 months.
The dollar index, which measures the US currency once morest a basket of six currencies, rose today, Tuesday, to 108.56, the highest level since October 2002. Investors tend to consider the dollar as a safe haven during market volatility.
Renewed travel restrictions due to “Covid-19” in China also affected oil prices, as many Chinese cities implemented new restrictions in an attempt to curb new infections of the highly contagious sub-strain of the virus.
And the National Security Adviser at the White House, Jake Sullivan, said yesterday, Monday, that US President Joe Biden will raise the issue of increasing oil production from “OPEC” when he meets with Gulf leaders in Saudi Arabia this week.
The Organization of the Petroleum Exporting Countries (OPEC) has forecast that global oil demand will rise by 2.7 million barrels per day in 2023, slightly slower than in 2022. However, spare capacity within OPEC is declining, with most producers pumping at maximum their energy.
The US Energy Information Administration expects US crude production and oil demand to rise in 2022.
