HOUSTON – The global benchmark for oil fell below $100 a barrel on Wednesday for the first time since late April, as fears of a recession spread among traders.
Oil prices have been falling for the past two weeks, above $120 a barrel just over a month ago, but the decline has accelerated in recent days.
Energy experts said there were no fundamental changes in the energy market, except for some signs that fuel sales in the United States may be slowing, feeding the perception that the economy is slowing. The prices of metals and other commodities are also falling.
“If a recession materializes and inflation continues to push prices higher for everything, oil demand is sure to fall, bringing prices with it,” said Louise Dixon, senior analyst at Rystad Energy, an analytical research firm.
There is a sharp difference of opinion among experts on where oil prices will go in the coming weeks and months. Prices will ultimately depend on how deep the recession can be and how strong Chinese demand will be as the country emerges from the Covid pandemic.
There is no sign of Russia’s war in Ukraine ending anytime soon, and despite tightening Western sanctions, Russian oil exports have remained more robust than many analysts expected. If Europe faces natural gas shortages next winter, utilities will be forced to burn more oil, which could tighten supplies and drive up crude prices.
Brent crude, the global oil benchmark, fell 3 percent to $99.61 on Wednesday. West Texas Intermediate, the US benchmark, fell 1 percent to $98.53 a barrel.
Gasoline prices are also declining but at a slower pace because it usually takes a week or two for the price at the pump to fully account for crude prices. Petroleum goes through several stages of processing and marketing before reaching the gas station.
The national average price for regular gasoline fell 2 cents to $4.78 a gallon on Wednesday, down 9 cents from a week ago. Average gas prices rose to $5 a gallon three weeks ago. Motorists are still paying an average of $1.65 more a gallon than a year ago.
Refinery capacity is hardly enough, especially as the United States sends more fuel to Europe to compensate for cuts in Russian imports. If the storm hits the Gulf of Mexico, damage to refineries could send gas and diesel prices skyrocketing, experts warn.
Oil stocks, which have performed well throughout the year, are suddenly falling. Shares of Hess and Marathon Petroleum fell more than 2 percent on Wednesday.