Oil prices slump to pre-Ukraine crisis levels on economic jitters

  • WTI crude futures are at their lowest this year
  • For the second time in 2022 Brent crude will be below $80 per barrel
  • Data from China, Europe show economic weakness
  • Investors are uncertain about a US rate hike
  • It was observed that US oil stocks were decreasing

NEW YORK, December 6. (Reuters) – U.S. oil prices fell to their lowest settlement level this year on Tuesday, with Brent reaching its 2022 benchmark. was below $80 a barrel for the second time as investors fled the volatile market amid uncertain economic conditions. .

Brent crude futures were down $3.33, or 4%, at $79.35 a barrel. WTI crude futures were down $2.68, or 3.5%, at $74.25 a barrel, their lowest this year.

Prices have fallen more than 1% in three straight sessions, giving up most of the year’s gains. Despite the ongoing war in Ukraine and one of the worst energy crises in decades, investors were unsettled by a flurry of bearish news.

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“It’s been almost three days, with OPEC+ deciding not to further cut production on Sunday, the toothless imposition of Russia’s price cap and sanctions yesterday, and today’s stock market rout as oil speculators charge for in-flight exits.” risk assets,” said Kpler oil analyst Matt Smith.

Activity in China’s service sector hit a six-month low, while European economies slowed amid high energy prices and rising interest rates. Wall Street’s benchmarks also fell on Tuesday amid uncertainty over the direction of the Federal Reserve’s interest rate hikes and continued talk of a looming recession.

Tuesday’s drop was the biggest daily drop in Brent since late September, when it hit $62 this year, its biggest one-year swing since 2008. financial collapse.

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“We could be looking at $60 a barrel WTI the way things are going,” said Eli Tesfaye, senior market strategist at RJO Futures. “I think $80 will be a new high, and I would be very surprised to see it go higher.”

The oil market has also largely ignored threats to supply, such as the G7’s $60 price cap on Russian seaborne oil exports, which is likely to cause the country to cut oil production.

Russia has said it will not sell oil to anyone who signs the price ceiling. Russia’s oil and gas condensate production rose 2.2% in January-November from a year earlier, according to Deputy Prime Minister Alexander Novak, who expects production to ease slightly after the latest sanctions.

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More cities in China are easing restrictions related to COVID-19, which is expected to boost demand in the world’s biggest oil importer, although it was not enough to stem the outflow in oil futures.

“Oil markets are likely to remain volatile in the near term due to the COVID headlines in China and central bank policy in the US and Europe,” UBS analyst Giovanni Staunovo said.

Meanwhile, US crude oil inventories are forecast to have fallen last week. The American Petroleum Institute’s weekly report is due later on Tuesday, followed by government data on Wednesday.

Reporting by Shariq Khan, additional reporting by Rowena Edwards, Muyu Xu; Edited by Barbara Lewis, Mark Potter and David Gregorio

Our Standards: The Thomson Reuters Trust Principles.

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