Oil prices have now fallen to their lowest level since December 2021, erasing all of the gains achieved this year.
West Texas Intermediate (WTI) crude oil, the U.S. benchmark, is currently trading at $73.50 U.S. per barrel, the same level it was at 12 months ago. Brent crude oil, the international standard, is trading at $78.60 U.S. a barrel.
In mid-June of this year, oil prices were trading above $120 U.S. per barrel amid elevated demand and global supply constraints following Russia’s invasion of Ukraine.
Prices are now in steep decline due to weak liquidity in the oil market. Open interest in Brent crude oil is at its lowest level since 2015.
Commodity traders are souring on oil as evidence mounts that the U.S. economy is slowing and might be headed for a recession as the U.S. Federal Reserve continues to raise interest rates to lower inflation.
Adding to the current selloff has been Saudi Arabia’s decision to lower oil prices in Asia, a sign that global demand is weakening. Oil prices throughout Asia are now at their lowest level since March of this year.
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