HOUSTON – The global oil benchmark fell below $100 a barrel for the first time since late April, as fears of an impending recession spread among traders.
The price of oil, which soared above $120 a barrel just a month ago, has been on the decline for the past two weeks, but the decline has accelerated in recent days.
Energy experts said there has been no fundamental change in the energy market, aside from some signs that fuel sales in the United States could slow, fueling perceptions that the economy is slowing. Metals and other commodities are also falling in price.
“If a recession hits and inflation continues to push prices up on almost everything, oil demand will almost certainly fall and so will prices,” said Louise Dickson, senior analyst at Rystad Energy, an analytical research firm.
Experts strongly disagree on where the oil price will go in the coming weeks and months. Prices will ultimately depend on how deep an eventual recession could be and how strong Chinese demand will become as the country emerges from the Covid pandemic.
There is no sign that the Russian war in Ukraine will end anytime soon, and despite tightening Western sanctions, Russian oil exports have remained more robust than many analysts had expected. If Europe runs out of natural gas next winter, utilities will be forced to burn more oil, which could reduce inventories and raise the price of crude oil.
The price of Brent oil, 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 falling, but at a slower pace as it normally takes a week or two for the price at the pump to fully account for crude oil prices. Petroleum goes through several stages of processing and marketing before it reaches the gas station.
The national average price for regular gasoline fell 2 cents to $4.78 a gallon on Wednesday, 9 cents lower than a week ago. The average gas price was $5 a gallon just over three weeks ago. Motorists are still paying an average of $1.65 per gallon more than a year ago.
Refinery capacity remains barely adequate, especially as the United States sends more fuel to Europe to offset the cut in Russian imports. If a hurricane were to hit the Gulf of Mexico, damage to refineries could send gas and diesel prices soaring, experts warn.
Oil stocks, which have performed well all year, are suddenly falling. Shares of Hess and Marathon Petroleum fell by more than 2 percent on Wednesday.