Oil Prices Tumble Below $97 a Barrel. Here’s Why. il prices extended their slump Tuesday as West Texas Intermediate crude futures fell below $97 a barrel to its lowest level this month.
U.S. oil closed at $109 a barrel Friday but has since fallen 11% so far this week. It reached close to $125 last week. Brent crude futures, the international benchmark, also dropped more than 6% Tuesday to $100 a barrel, having topped $130 at one point last week.
It comes amid hopes over cease-fire talks between Russia and Ukraine and as China imposed lockdown restrictions on major manufacturing regions and millions of people, potentially weakening demand for oil.
“The prospect of a diplomatic solution toward Russia’s military aggression against Ukraine would help ease the world’s energy supply shock that has sent commodities soaring,” Interactive Investor’s head of investment Victoria Scholar said, as she noted that talks between the two sides continued Monday.
“Meanwhile on the demand side for oil, fears about an aggressive policy response from Beijing to China’s Covid outbreak has raised the prospect of a much weaker demand for oil from the world’s second largest economy,” she added.
BDSwiss head of investment research, Marshall Gittler, noted that oil prices weren’t that far off their levels a month ago, before Russia’s invasion began.
“OPEC and others have been pointing out that at the moment there is no shortage of oil, just the fear of a shortage of oil in the future. The price of oil further out in the future isn’t that different than it was a month ago,” he said.