Oil nosedived late in the session as ample crude supply balances and growing unease over the US economy’s trajectory sent bulls fleeing.
Global benchmark crude Brent reached its lowest this year, while West Texas Intermediate fell to its lowest in three months. The Organization of Petroleum Export Countries said it sees a modest surplus next quarter during a seasonal lull in demand. After prices settled, crude continued its descent testing lows not seen seen since Dec. 2021.
The late-day plummet was “pretty astounding,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth. Some speculated a large liquidation event triggered the move but said no one knew for sure.
“Energy traders can’t find a reason to buy this dip until we get past the next round of inventory data,” said Ed Moya, a senior market analyst at Oanda. “Rising stockpiles are expected and that could keep oil vulnerable over the next 24 hours,”
Crude has had a bumpy year so far as traders juggle concerns over a global economic slowdown and careful optimism regarding China’s demand rebound. Inflation accelerated last month, raising the question as to whether the Federal Reserve would feel pressure to raise rates at its meeting next week despite ongoing financial turmoil in the banking system.
Traders will be watching price action to see if the flat price is supported at recent lows. “If buyers don’t show up soon and support oil at $70, we can see an air pocket lower to $62,” said Jc O’Hara, the chief technical strategist at Roth Mkm.
US inventory data is scheduled to be published Wednesday morning. The International Energy Agency also releases its snapshot on the outlook for supply and demand on Wednesday.
Prices:
- WTI for April delivery fell $3.47 to settle at $71.33 a barrel in New York.
- Brent for May settlement dropped $3.32 to settle at $77.45 a barrel.
