On Tuesday, oil fell to less than $100 a barrel for the first time in 3 months. This significant drop came after a month of price fluctuations and sales of oil positions by investors, who rightly expected a drop in demand for oil due to the economic downturn.
Brent futures also fell by almost 7% to $99.49 per barrel, reaching a three-month low. WTI crude also showed a three-month low, losing 7.9%, trading at $95.87 a barrel.
By TradingView
In total, Brent and WTI have lost 29% and 27% in value respectively since their March highs.
Chinese restrictions, rising interest rates and a stronger dollar weigh on the price of oil.
The dollar index jumped to nearly a twenty-year high, hitting 108.56. A strong dollar makes oil more expensive for holders of other currencies.
Investors, anxious about a possible recession, are selling oil derivatives very quickly. About a week before July 5, the hedge funds sold options and futures contracts for the equivalent of 110 million barrels.
The demand for futures contracts on NYMEX reached almost a seven-year low at the moment.
EIA says that the U.S. oil production and demand will grow in 2022 as the economy grows.
EIA inventory data is due out this week, while the American Petroleum Institute said crude inventories rose to 4.8 million barrels the week before and gasoline inventories rose slightly less, by 3 million barrels.
OPEC (Organization of the Petroleum Exporting Countries) predicts that global oil demand will grow by 2.7mbd next year. However, it is unclear whether OPEC countries will be able to meet the global demand, since most of them are already pumping at maximum capacity.
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