Oil prices have slumped below the $100 milestone on both major benchmarks today, amid fears of reduced demand and interest rate hikes from the Federal Reserve.
Brent Crude settled under $100 for the first time since April yesterday, dropping seven per cent over the course of just one day of trading.
For context, it was trading at $125 per barrel as recently as last month.
Despite a brief recovery during a volatile trading session this morning, it eventually settled on double digits this afternoon – trading at $99.22 per barrel.
This a slight 0.27 per cent drop on yesterday’s numbers.
Meanwhile, WTI Crude enjoyed a 0.08 per cent bump, but also remains shy of $100 at $95.92 per barrel.
Oil investors have been selling heavily in recent weeks, concerned that aggressive rate hikes to stem inflation will slow economic growth and subsequently hit oil demand.
US inflation hit 9.1 per cent last month, and there are growing media reports the central bank could deliver a 75 basis point rate increase at their upcoming policy meeting on July 26-27, following a similar-size hike at their last meeting in June.
Meanwhile, both the Organization of the Petroleum Exporting Countries and International Energy Agency published separate monthly reports this week warning that demand is weakening, particularly in the largest world economies with recessions looming across developed economies.
Nevertheless, the physical market remains tight, and prices remain historically high – with oil prices not touching the $100 benchmark for around eight years prior to Russia’s invasion of Ukraine
Craig Erlam, senior market analyst at OANDA said: “Both Brent and WTI are now back below $100, down around 20 per cent over the last month, and they may well remain below there which would have been inconceivable in mid-June. Central banks are in panic-tightening mode and the inflation data isn’t easing up. Throw in more Chinese Covid restrictions and the market will start to look far more balanced, just not in the way anyone wanted.”