Oil, which recently hit record highs, took a steep dip and saw some heavy losses on Tuesday, following on the heels of a Monday dip.
Among the factors contributing to the swoon: talks between Russia and Ukraine, a potential slowdown in Chinese demand for oil, and trade activity preceding a widely anticipated rate hike by the Federal Reserve on Wednesday.
As CNBC reported, West Texas Intermediate (WTI) crude, the U.S. oil benchmark, and global benchmark Brent crude fell in under $100 per barrel Tuesday. That was a $30 dip in per-barrel value from a mere week earlier.
CNBC said WTI ended the day at $96.44, a loss of more than 6%, though slightly up from its bottom for the day of $93.53. Brent settled 6.54% lower at $99.91 per barrel. Low, if again just above the bottom of $97.44.
“Growth concerns from the Ukraine-Russia stagflation wave, and FOMC hike this week, and hopes that progress will be made in Ukraine-Russia negotiations” are weighing on prices, Jeffrey Halley, senior market analyst at Oanda, said, according to the finance news network. Halley referenced the Federal Open Market Committee recent rate hike.
By way of comparison, crude ticked up to more than $100 per barrel for the first time in years the day Russia invaded Ukraine last month, and prices continued to climb as the conflict intensified.
WTI hit a high of $130.50 a barrel early last week, while Brent traded as high as $139.26 per barrel. Analysts cited trader worry that Russia’s energy exports would be disrupted.
As part of a punishing wave of sanctions against Russia for its actions against Ukraine, the U.S. and Canada have banned Russian energy imports; likewise, the U.K. has said it will phase out such imports.
However, it is notable that other nations in Europe that tap the Moscow oil and gas supply have yet to follow suit.
Analysts acknowledge the picture remains murky as the weeks-old Ukraine-Russia conflict grinds on and a peaceful resolution remains elusive.
Oil has been particularly volatile in recent days, as every new global development seems to impact pricing.
Meanwhile, on another front, China’s latest moves to curb the lingering pandemic, and a new spike in COVID-19 cases even as other nations are easing restrictions and mandates, are also having an impact on prices.
China represents the globe's biggest importer of oil, and anything that threatens an economic slowdown is bound to have some effect on demand and oil pricing.
The recent price surge for oil brought record prices at the gas pump across the United States, with AAA reporting an average gallon topping out at $4.331 at the end of last week. On Tuesday the cost had backed off slightly from that all-time high, to $4.316, said CNBC.
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