Oil plummeted about 9% on Tuesday in the biggest daily drop since March, and failed to regain ground on Wednesday, as growing fears of a global recession and lockdowns in China that could slash demand weighed on prices.
On Tuesday, global benchmark Brent crude settled at $102.77 a barrel, losing $10.73, or 9.5%, according to Reuters. U.S. West Texas Intermediate (WTI) crude ended 8.2%, or $8.93, lower at $99.50 a barrel. Wednesday saw gains reversed, turning lower during mid-morning trading on Wall Street as worries about a global recession linger, according to CNBC.
“Today is sort of a reset. No doubt there is short covering and bargain hunters are coming in,” John Kilduff, partner at Again Capital LLC, told CNBC. “The fundamental story regarding global tightness is still there… The sell-off was definitely overdone.”
If a recession does hit, and takes a significant bite out of energy demand, more wild swings to the downside could be in store, Andy Lipow, president of consultancy Lipow Oil Associates, told Reuters. “The commodity market can be quite unforgiving when you go into a recession and supplies outstrip demand,” Lipow said.
Meanwhile, gas prices fell two cents Wednesday to $4.779 per gallon, according to AAA data, down 24 cents from its highest-ever recorded level of $5.016 last month, and are on track to continue falling, according to Forbes.
