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Crude oil prices fell sharply Monday on continued worries over Chinese demand, a potential U.S. recession and strong Russian crude flows.
Even Saudi Arabia’s recent pledge to cut more production in July has failed to keep prices elevated; the Brent price has dropped 5.5% since the announcement eight days ago.
Citing rising supply and waning demand, Goldman Sachs cut its year-end Brent forecast to $86/bbl from $95 and its WTI crude outlook to $81/bbl from $89.
Brent crude (CO1:COM) sank to its lowest settlement since December 20, 2021, as the front-month contract for August finished -3.9% to $71.84/bbl, and front-month Nymex crude (CL1:COM) for July delivery ended -4.3% to $67.12/bbl, its lowest settlement since March 17 and second lowest close this year.
ETFs: (NYSEARCA:USO), (BNO), (UCO), (SCO), (DBO), (USL), (DRIP), (GUSH), (USOI), (NRGU)
The energy sector (NYSEARCA:XLE) was the stock market’s worst performer, -0.9%; some of the day’s biggest losers included KLX Energy (KLXE) -8.7%, Transocean (RIG) -8.5%, Core Labs (CLB) -8.4%, Gran Tierra Energy (GTE) -7.8%, Noble Corp. (NE) -6.5%, Tidewater (TDW) -6%, NGL Energy Partners (NGL) -5.9%, Vermilion Energy (VET) -5.6%, Helix Energy (HLX) -5.6%, Valaris (VAL) -5.3%.
“The oil market doesn’t appear like it will get tight anytime soon on fears that China’s weak post-COVID recovery won’t be improving anytime soon and as Russia continues to sell more oil to China and India,” Oanda analyst Edward Moya said.
Attention this week is on the Federal Reserve, which is expected to hold interest rates unchanged also could signal that further hikes are coming to continue bringing down inflation, which could push crudes prices still lower.
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