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Oil futures were under renewed pressure Thursday, extending a drop below $100 a barrel and erasing a large chunk of the gains seen in the wake of Russia’s late-February invasion of Ukraine.
Price action
-
West Texas Intermediate crude for August delivery
CL.1,
-1.82% CLQ22,
-1.82%
fell $2.66, or 2.8%, to $93.64 a barrel on the New York Mercantile Exchange. -
September Brent crude
BRN00,
-1.60% BRNU22,
-1.60% ,
the global benchmark, dropped $2.33, or 2.3%, to $97.24 a barrel on ICE Futures Europe. -
Back on Nymex, August gasoline
RBQ22,
-2.49%
dropped 3.3% to $3.1264 a gallon, while August heating oil
HOQ22,
-1.78%
shed 2% to $3.5935 a gallon. -
August natural gas
NGQ22,
+1.60%
rose 1.3% to $6.776 per million British thermal units.
Market drivers
WTI has dropped more than 10% so far this week, while Brent has slumped 9% as fears that aggressive monetary tightening by the Federal Reserve and other major central banks in response to persistent inflation pressures could trigger a sharp economic slowdown or recession.
President Joe Biden this week is scheduled to visit Saudi Arabia, a move that’s seen as aimed at persuading the kingdom to loosen its taps, though analysts have questioned the scope of a Saudi response.
Opinion: Is Biden making a mistake by going to Saudi Arabia?
“It is hard to ignore recent concerns over oil fundamentals, both from the possible higher supply from [United Arab Emirates] and Saudi Arabia against the backdrop of weaker global demand that may very well open the door for test sub-Brent $85 if the Kingdom heeds Biden’s pleas,” said Stephen Innes, managing partner at SPI Asset Management, in a note. “At the same time, low liquidity and technical factor may compound the move.
“As the demand destruction narrative builds against the backdrop of incoming supply, it will undoubtedly put the oil market invincible bullish thesis to the stress test,” Innes said.
In One Chart: Oil selloff puts crude near ‘inflection point’ as investors weigh inflation outlook
Based on most actively traded contracts, WTI had traded as high as $130.50 a barrel intraday on March 7, while Brent rose as far as $139.13. WTI ended at $92.10 on Feb. 23, the eve of Russia’s invasion of Ukraine, while Brent had closed at $94.05.
