Oil plunged by more than 8%, hitting a low of $ 99.76 a barrel. That is, oil has lost almost a quarter of its value since it reached a high of nearly 14 years at $ 130.50 on March 6.
This is the first time oil has traded for less than $ 100 since March 1.
“This is one hell of a fix,” said Tom Croza, global head of energy analysis for oil price information analysis.
Brent crude, the world benchmark, has fallen more than 7% in recent trading to $ 104.35 a barrel. This shows a sharp retreat from its recent peak of nearly $ 140 a barrel.
“You’re seeing some bad selling,” said Matt Smith, Kpler’s chief oil analyst in the Americas.
Despite recent sales, oil continues to grow by more than 30% annually.
What does this mean for gas prices
Still, a fall to $ 100 should lower the price of pumps that lag behind oil.
If oil prices remain at current levels, the national average price of regular gasoline is likely to fall by about 20 cents per gallon, Croza said.
Unfortunately, pump relief may not last long.
Kloza expects gasoline prices to rise this spring and summer as demand recovers, with the national average rising to about $ 4.50 per gallon.
“It’s just going to be a wild vehicle,” Croza said.
Rabobank’s energy strategist Ryan Fitzmorris also believes that oil prices have not yet set the highest levels in the current cycle.
“Ultimately, there will be new highs before everything is told and completed. Given how big and important Russia is, it’s the highest ever set in 2008. It will break the value. “
Blockade of Covid in China
“The coronavirus has taught us that we can’t expect stable results. We come here when we think people are returning to normal behavior,” Croza said.
Oil traders are also watching the progress of the war in Ukraine, including ongoing negotiations between Ukraine and Russia. The ceasefire could ease concerns about a prolonged flow of oil from Russia, the world’s second-largest oil producer last year.
However, energy veterans warned not to overread the headlines on negotiations between Russia and Ukraine.
Robert Yoger, vice president of energy futures at Mizuho Securities, said:
Even if a ceasefire occurs, it is highly unlikely that the West will quickly remove sanctions on Russia, Mr. Yoger said. “Sanctions will not disappear soon.”