Brent Crude prices settled below $80 per barrel on Tuesday and continued to trade below that level early on Wednesday in Asian trade, erasing all the gains from 2022 as it plunged to the lowest level in a year.
The last time Brent had settled below $80 per barrel was in early January this year, more than a month before the Russian invasion of Ukraine which roiled global energy markets and sent crude oil prices above $100 per barrel in the spring.
Early on Wednesday in Asian trade, Brent Crude traded at $79.58, up by 0.28%, and WTI Crude was trading below $75 per barrel—at $74.38, up 0.23%.
The range of highest and lowest trades of oil prices this year has been a massive $62, which is the biggest oil trading range in one year since the 2008 financial crisis.
Although the EU embargo and the price cap on Russian crude came into effect earlier this week, the main headline in the oil and equity markets has been the general economic slowdown globally with gloomier predictions of the state of the economy in recent days. In addition, oil traders and speculators are fleeing the market at the end of the year amid high volatility and uncertainty. Moreover, the structure of the oil futures market is showing signs of sluggish global oil demand and sufficient supply.
In Asian trade early on Wednesday, “There was no decisive upward momentum from bargain-hunting buying despite prices plunging to their levels lowest in a year after three consecutive sessions of a sharp sell-off,” Vanda Insights said.
“The mood in the broader financial markets further soured after major Wall Street banks warned of rough economic headwinds at an industry conference on Tuesday.”
Ed Moya, Senior Market Analyst at OANDA, said on Tuesday, “The crude demand outlook is getting crushed as we are in a slowdown basically across all the major economies. Supplies seem plentiful over the near-term and that has everyone hesitating on what was one of the easiest trades of the year.”
By Tsvetana Paraskova for Oilprice.com