The price of US crude WTI fell nearly 10%, to below $100 a barrel for the first time since early May.
Closing the session on July 5, each barrel of WTI dropped 8% to $99.5. During the session, the price at one point dropped nearly 10% to 97.43 USD. Brent oil also lost more than 10% to $101.1, then recovered and closed at $102.7.
This is the first time WTI has fallen below $100 since May 11. Recession fears were the main reason crude oil sold off yesterday, according to Tom Kloza, director of energy analysis at OPIS.
Until recently, investors believed that gasoline prices could sustain in the short term. “Now they are increasingly realizing the recession risk is increasing and will drag prices down,” he said.
In recent weeks, recession fears have grown, causing oil prices to plummet. A month ago, Brent was $123.5 a barrel, and WTI was $122.
However, the US consumer price index (CPI) reached a 40-year high in June. This is one of the main reasons why the US Federal Reserve (Fed) raised interest rates by 0.75% last month. to curb inflation. This raises suspicions that the Fed acting too aggressively could leave many Americans unemployed and trigger a recession.
Global gasoline prices spiked this year after Russia launched a military campaign in Ukraine, prompting the United States and its European allies to impose sanctions on the country’s energy sector. Russia is now the world’s energy power.
However, if a recession occurs, demand will plummet, dragging prices down. When workers are unemployed, commuting to work, shopping, and tourism will inevitably plunge.