Oil topped $100 for first time since 2014 in February
Prices for oil in the U.S. sank to below $100 a barrel on Monday amid renewed COVID-19 lockdowns in China and ongoing peace talks between Russia and Ukraine.
The benchmark for U.S. oil, West Texas Intermediate (WTI) crude, dipped 8.75% to trade at $99.76 per barrel at one point during the day, however it recovered to end at $103.01 per barrel.
Brent crude, meanwhile, remained above $100 but fell 8% to trade at $103.86 per barrel at one point, before ending at $106.90, still a loss of 5.1%.
The drop in price can be attributed to peace talks between Russia and Ukraine and new COVID-19 lockdowns in China. Both could ultimately hurt demand for U.S. oil.
Rebecca Babin, senior energy trader at CIBC Private Wealth U.S., told CNBC that the demand for U.S. oil could end up being hurt by what is going on in China and Eastern Europe.
“Today’s action reflects a shift in sentiment in Russia/Ukraine causing sentiment traders to sell, fundamental concerns around demand coming from China’s Covid lockdowns causing fundamental traders to take profits, and technical pressure as crude breaks key levels,” Babin told CNBC.
The dip in price continues a difficult week-plus now for WTI and Brent, with both experiencing their worst weeks price-wise since last November.
Oil initially broke $100 a barrel in February after Russia invaded Ukraine, marking the first time U.S. oil surpassed the triple digits in price since 2014.
WTI would get as high as $130.50, while Brent would reach nearly $140 at its peak. Both WTI and Brent are up more than 30% on the year, despite the recent decline.
“We have a demand scare for the first time in a while,” John Kilduff, partner at Again Capital, told CNBC. “The Covid lockdown in China has spooked the market.”