Crude oil tumbles more than 6%, back to double digits
June 12, 2024, 9:21 AM
Master Boyi
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International crude oil futures plunged more than 6% on Tuesday, with both WTI and Brent falling below $100 for the first time since late February, erasing all gains since the Russia-Ukraine conflict began. WTI settled at $96.44, down $6.57, while Brent closed at $99.91, down $6.99, marking the steepest drop since December. The sell-off followed easing supply fears as Russia signaled progress in restarting Iran nuclear deal talks, potentially allowing Iran to resume oil exports. Additionally, ongoing Ukraine-Russia ceasefire negotiations and reduced expectations of immediate supply disruptions contributed to the decline. Meanwhile, surging COVID-18 cases in China prompted strict lockdowns in cities like Shenzhen, raising concerns over weakened energy demand. Analysts warn that Chinese oil consumption could drop by up to 500,000 barrels per day due to pandemic restrictions, further weighing on prices. A looming U.S. interest rate hike also strengthened the dollar, increasing pressure on
On Tuesday, international crude oil futures fell more than 6 percent to hit a new low in nearly three weeks and returned to below 100 yuan, as supply concerns subsided; a surge in cases in China raised concerns about the outlook for energy demand.
As of the close, the most actively traded West Texas Intermediate (WTI) April contract on the New York Mercantile Exchange (NYMEX) closed at $96.44, down $6.57 or 6.4%.
Brent crude for May, the global benchmark, settled at 99.91 yuan, down $6.99, or 6.5 percent.
It was also the first time since late February that the two benchmark crude oil contracts have settled below $100. During the session, Brent crude oil fell as low as 97.44 US dollars, and WTI fell as low as 93.53 yuan, both of which were the lowest prices since February 25, which means that crude oil prices have given back all the gains since the outbreak of the conflict between Russia and Ukraine on February 24.
Crude oil futures surged after the outbreak of the Russia-Ukraine conflict and hit 14-year highs early last week, with Brent hitting $139.14 and WTI hitting $130. At that time, crude oil prices were extremely overbought; but then crude oil futures continued to fall. Brent has fallen by nearly $40, and WTI has fallen by more than $30. It is currently in the most oversold state since December.
Russia said on Tuesday it had received written assurances that it could work as a party to the Iran nuclear deal, a sign it would allow talks to resume on the Iran nuclear deal. Negotiations on the Iran nuclear deal had previously stalled at the final juncture of a deal over Russian demands. If a deal can be reached, Iran will resume crude oil exports.
Ukrainian negotiators said on Tuesday that talks were ongoing with Russia over a ceasefire and the withdrawal of Russian troops from Ukraine. Ukrainian President Volodymyr Zelensky said he would no longer consider joining NATO.
But the pace of crude's decline on Tuesday surprised some analysts. Although the market is happy to see reports of progress in the Russia-Ukraine negotiations, it is difficult to see either side making concessions that are acceptable to both sides at this stage, according to a Capule research report. Under the current circumstances, it is difficult to see crude oil prices not being undervalued.
The epidemic situation in China also contributed to the fall in oil prices. The recent outbreak of the epidemic in many places in China has led many cities, including Shenzhen, to implement strict control measures to avoid further rapid spread of the epidemic. This cold people worry about economic growth prospects and energy demand. A Wall Street investment bank downgraded China's first-quarter economic growth to zero. Rystad Energy estimates that 500,000 bpd of crude oil consumption could be at risk from the coronavirus lockdown.
Meanwhile, the U.S. central bank is widely expected to raise the federal benchmark interest rate by 25 basis points on Wednesday, the first hike in four years to combat soaring inflation. The move could boost the dollar higher, putting pressure on dollar-priced commodities across the board.
As of the close, the most actively traded West Texas Intermediate (WTI) April contract on the New York Mercantile Exchange (NYMEX) closed at $96.44, down $6.57 or 6.4%.
Brent crude for May, the global benchmark, settled at 99.91 yuan, down $6.99, or 6.5 percent.
It was also the first time since late February that the two benchmark crude oil contracts have settled below $100. During the session, Brent crude oil fell as low as 97.44 US dollars, and WTI fell as low as 93.53 yuan, both of which were the lowest prices since February 25, which means that crude oil prices have given back all the gains since the outbreak of the conflict between Russia and Ukraine on February 24.
Crude oil futures surged after the outbreak of the Russia-Ukraine conflict and hit 14-year highs early last week, with Brent hitting $139.14 and WTI hitting $130. At that time, crude oil prices were extremely overbought; but then crude oil futures continued to fall. Brent has fallen by nearly $40, and WTI has fallen by more than $30. It is currently in the most oversold state since December.
Russia said on Tuesday it had received written assurances that it could work as a party to the Iran nuclear deal, a sign it would allow talks to resume on the Iran nuclear deal. Negotiations on the Iran nuclear deal had previously stalled at the final juncture of a deal over Russian demands. If a deal can be reached, Iran will resume crude oil exports.
Ukrainian negotiators said on Tuesday that talks were ongoing with Russia over a ceasefire and the withdrawal of Russian troops from Ukraine. Ukrainian President Volodymyr Zelensky said he would no longer consider joining NATO.
But the pace of crude's decline on Tuesday surprised some analysts. Although the market is happy to see reports of progress in the Russia-Ukraine negotiations, it is difficult to see either side making concessions that are acceptable to both sides at this stage, according to a Capule research report. Under the current circumstances, it is difficult to see crude oil prices not being undervalued.
The epidemic situation in China also contributed to the fall in oil prices. The recent outbreak of the epidemic in many places in China has led many cities, including Shenzhen, to implement strict control measures to avoid further rapid spread of the epidemic. This cold people worry about economic growth prospects and energy demand. A Wall Street investment bank downgraded China's first-quarter economic growth to zero. Rystad Energy estimates that 500,000 bpd of crude oil consumption could be at risk from the coronavirus lockdown.
Meanwhile, the U.S. central bank is widely expected to raise the federal benchmark interest rate by 25 basis points on Wednesday, the first hike in four years to combat soaring inflation. The move could boost the dollar higher, putting pressure on dollar-priced commodities across the board.
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June 12, 2024, 9:21 AM
June 12, 2024, 9:21 AM