Oil prices tumbled below $100 a barrel on Tuesday, to levels not seen since before the Russian invasion of Ukraine three weeks ago, as investors reassessed the huge run-up in prices seen in recent weeks.
Price action
-
West Texas Intermediate crude for April delivery
CL.1,
-5.98%
CL00,
-5.98% CLJ22,
-5.98%
fell 5.1% to $97.72 a barrel. On Monday, the contract fell $6.32, or 5.8%, to settle at $103.01 a barrel on the New York Mercantile Exchange, but dipped under $100 during the session. -
May Brent crude
BRN00,
-6.14% BRNK22,
-6.14% ,
the global benchmark, fell $5.78, or 5.4% to $101.16 a barrel. On Monday, the contract fell 5.1%, to $106.90 a barrel on ICE Futures Europe. Last week, WTI pushed above $130 a barrel, and Brent neared $140 amid volatile trading conditions. -
April natural gas
NGJ22,
-2.21%
fell 1.48% to $4.592 per million British thermal units. -
April gasoline
RBJ22,
-5.20%
slid 4.6% to $3.022 a gallon and April heating
HOJ22,
-6.82%
fell nearly 5% to $3.114 a gallon.
Market drivers
Oil prices continued to slide after Monday’s losses , fueled by reports that the U.S. could lift sanctions on Venezuelan oil. That could ease some supply worries as the war between Ukraine and Russia stretches to a third week.
Negotiations between the two countries were set to continue after no breakthrough was reached on Monday, as Russian forces continued to pound Ukraine. Apart from the humanitarian catastrophe, the conflict has sparked concerns over global growth and sent commodities prices surging across the board.
Adding to growth worries, China’s southeastern manufacturing hub of Shenzhen has been locked down due to a COVID outbreak in the northeast of the country, triggering further concerns about growth in the country.
“The downside correction in oil prices is sure a relief when it comes to the inflation expectations, but the new lockdown measures [in China] will continue worsening the supply chain crisis and add on the inflation worries,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank, in a note to clients.
Fresh data Tuesday showed China’s economic activity rebounded strongly in the first two months of the year, despite a high base of comparison a year earlier.
U.S. stock futures
ES00,
NQ00,
were also under pressure, with sharp losses for Asian equities, as the Hang Seng
HSI,
fell nearly 6%, and European futures pointed to a weaker start for those markets.
Meanwhile, data showed hedge-fund managers “slashed net-bullish Brent oil bets to their lowest levels on record,” noted Naeem Aslam, chief market analyst at AvaTrade. “The retreat demonstrates that significant swings in the oil market were part of a broad-based liquidation of positions, with speculators closing out long contracts in WTI, diesel, and gasoline futures.”
“According to ICE, the fall in Brent was fueled by the largest drop in outright bullish bets since 2018,” he said.