Oil prices fall below $100 a barrel

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CNBC: Oil registered heavy losses Tuesday, building on Monday’s decline, as myriad factors weighed on sentiment, including talks between Russia and Ukraine, a potential slowdown in Chinese demand and unwinding of trades ahead of the Federal Reserve’s expected rate hike on Wednesday.

Both West Texas Intermediate crude, the U.S. oil benchmark, and global benchmark Brent crude settled below $100 per barrel Tuesday, a far cry from the more than $130 they fetched just over a week ago.

WTI ended the day at $96.44, for a loss of 6.38%. During the session it traded as low as $93.53. Brent settled 6.54% lower at $99.91 per barrel, after trading as low as $97.44.

WTI and Brent fell 5.78% and 5.12%, respectively, on Monday.

Oil rigs work on platforms in Gaoyu Lake in Gaoyou in east China's Jiangsu province Friday, Sept. 17, 2021.
Oil rigs work on platforms in Gaoyu Lake in Gaoyou in east China’s Jiangsu province Friday, Sept. 17, 2021.
Barcroft Media | Getty Images

“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, said Jeffrey Halley, senior market analyst at Oanda. “It seems like the old adage that the best cure for high prices, is high prices, is as strong as ever,” he added, noting that he believes the top is in for oil prices.

Crude surged above $100 per barrel for the first time in years the day Russia invaded Ukraine, 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. Prices jumped as traders feared that Russia’s energy exports would be disrupted. So far the U.S. and Canada have banned Russian energy imports, while the U.K. has said it will phase out imports from the country.

But other nations in Europe, which are dependent on Russia’s oil and gas, have not enacted similar moves.

“It’s really a market that traded entirely on fear,” Rebecca Babin, senior energy trader at CIBC Private Wealth U.S., said of the initial spike higher amid supply fears. “Now, without a true change in the facts, we’re trading on the hope” that things won’t be as bad in the commodity market as initially feared.

“We don’t have a lot of clarity around what is really going to happen with crude supplies in the future as a result of this conflict,” she added.

While self-sanctioning has happened to a certain extent, experts say Russian energy is still finding buyers, including from India.

China’s latest moves to curb the spread of Covid-19 are also having an impact on prices. The nation is the world’s largest oil importer, so any slowdown in demand will hit prices.

A deal with Iran could also add new barrels of oil to the market. Russia’s Foreign Minister Sergey Lavrov is in favor of resuming the deal, according to Reuters.

Oil has been especially volatile in recent sessions, whipsawing between gains and losses with every new geopolitical development.

As Tamas Varga from brokerage PVM summarized: “Is it the mother of all corrections or the market is turning increasingly confident that a significant supply shock will be avoided?”

The surge in oil has pushed prices at the pump to record highs. The national average for a gallon of gas hit $4.331 on Friday, the highest ever, according to AAA. The number is not adjusted for inflation.

Prices have eased slightly since. The average for a gallon of gas stood at $4.316 Tuesday.

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6 COMMENTS

  1. So Gaston, what is your plan!
    If you know how stupid you look!’
    You rush to raise the price even though we had 6 months supply in storage.

    Now oil prices are falling!

    You are such a fool. You do everything to make black people hard.

  2. Gaston will take off a dollar off the gas just before the election and claim that he slash the price more than Mia. Just watch. No matter how much the price of oil drop, is $1 we getting off.

  3. Instead of trying to take advantage of this current crisis of the war with all those companies pulling out of Russia, this government should be seeking to lure some of those companies to invest in Antigua. Instead this government is operating in the reverse. This government is pressurizing its own people.
    As soon as it was announced that the price of gas will reach record high price for a barrel, this government raised the price on old gas stock. And yesterday when the price was raised oil price worldwide was quickly falling at record low prices.
    How much more pressure does the Antiguan Government wants to put on the nation?
    Have they run out of investment ideas? Is it time for a change?
    No water, high food prices, high electricity bills as a result of the high fuel variation charges which they promised to reduce, now raised fuel prices. Maybe it’s time for the change. As the song says, “If ya can’t run the country, give it to somebody. “

  4. The hurriedly raising of gas prices proves that this government has run out of ideas and has resorted to squeezing its own people in the effort to generate revenue.
    It’s more or less like a starving animal locked in a cage that would start eating it’s extremities to survive.
    The UPP did the same during their last reign and invented a whole set of new taxes.
    Antigua needs fresh brains to run the country.

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