NEW YORK (Reuters) – U.S. oil prices fell in frantic trading on Tuesday to their lowest levels this year, with Brent crude closing below $80 a barrel for the second time in 2022, as investors fled the volatile market in an uncertain economy. .
Brent crude futures fell $3.33, or 4%, to settle at $79.35 a barrel. West Texas Intermediate crude futures fell $2.68, or 3.5 percent, to settle at $74.25 a barrel, its lowest settlement this year.
Prices have fallen more than 1% for three consecutive sessions, giving up most of their gains for the year. A string of negative news has investors worried despite the ongoing war in Ukraine and one of the worst energy crises in recent decades.
“It’s exactly the three days gone by — with OPEC+ deciding no more production cuts on Sunday, the toothless start of price caps and Russian sanctions yesterday, turmoil in stock markets today, and oil speculators charging for exits amid a flight from… Kpler’s flagship oil, “Risk Asset.”
Service sector activity in China hit a six-month low, and European economies slowed due to rising energy costs and higher interest rates.
Wall Street also fell on Tuesday due to uncertainty about the direction of the Fed’s rate hikes and more talk of a looming recession.
Tuesday’s drop was the biggest daily drop in Brent prices since late September, which has been trading in the $62 range this year – its biggest swing in a year since the 2008 financial crash.
“We could be looking at $60 a barrel for WTI the way things are going,” said Elie Tesfaye, senior market analyst at RJO Futures. “I think the ’80s are going to be a new high, and I would be very surprised to see any higher than that.”
The oil market has also largely overlooked supply threats, such as those imposed by the Group of Seven at $60 cap on Russian seaborne crude oil exports, which are likely to cause the country to cut its oil production.
Russia has said it will not sell oil to anyone who adheres to the price ceiling. Russia’s production of oil and gas condensate in January-November rose 2.2% from a year ago, according to Deputy Prime Minister Alexander Novak, who expects a slight drop in production after the latest sanctions.
In China, more cities are easing restrictions related to COVID-19, which has raised expectations of increased demand in the world’s largest oil importer, although it was not enough to stop the bleeding in oil futures.
“Oil markets are likely to remain volatile in the near term, driven by the Covid headlines in China and central bank policies in the US and Europe,” said UBS analyst Giovanni Stonovo.
US crude oil inventories fell by 6.4 million barrels last week, while gasoline and distillate inventories rose, according to market sources citing American Petroleum Institute figures on Tuesday.
(Covering by Sharq Khan). Additional reporting by Rowena Edwards and Muyu Show. Editing by Barbara Lewis, Mark Potter, David Gregorio and Deepa Babbington
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