WTI crude oil settles at lowest price since January 25

·Markets Reporter
·2 min read

U.S. oil prices continued their recent fall on Tuesday, with West Texas Intermediate (CL=F) futures settling at their lowest level since January 25.

WTI, the U.S. benchmark price, fell more than 3% during the session, settling at $86.53 per barrel, the lowest close since the $85.60 seen on January 25th. The January 3 closing price of $76.03 per barrel for WTI crude remains this year's closing low.

Brent crude futures (BZ=F), the international benchmark, also slid on Tuesday, falling more than 2%.

The declines come on the prospects of an Iranian nuclear deal, which would mean more oil entering the market at a time when data suggests a slowdown in the global economy.

"If a deal with Iran is reached, the implications for the oil market and Russia could be far reaching," Andy Lipow of Lipow Oil Associates said in a recent note to investors.

Oil has fallen sharply in the last several weeks amid fears of a recession in the U.S, and on-and-off lockdowns in China.

"The market is also concerned about weakness in the Chinese economy. July crude oil imports into China were about 10% less than July 2021," wrote Lipow.

The Biden administration is also planning a cap on Russian oil, a move aimed at preventing a spike in energy prices amid Western sanctions on Russia. U.S crude futures rose above $120/barrel in March after Russia invaded Ukraine, with prices again topping $120 in early June.

U.S. President Joe Biden calls for a federal gas tax holiday as he speaks about gas prices during remarks in the Eisenhower Executive Office Building's South Court Auditorium at the White House in Washington, U.S., June 22, 2022. REUTERS/Kevin Lamarque
U.S. President Joe Biden calls for a federal gas tax holiday as he speaks about gas prices during remarks in the Eisenhower Executive Office Building's South Court Auditorium at the White House in Washington, U.S., June 22, 2022. REUTERS/Kevin Lamarque

Consumers are also benefiting from lower oil prices, as gasoline prices have come off their all-time June highs. Retail gasoline prices now sit at $3.95 per gallon, according to AAA. In mid-June, the average cost of a gallon of gas in the U.S. topped $5 for the first time.

The latest Consumer Price Index (CPI) showed a moderate slowdown in inflation, reflecting a drop in energy prices. Prices in July rose 8.5% year-over-year, less than what economists had expected, and down from 9.1% in the prior month's reading. Compared to the prior month, consumer prices were unchanged in July.

WTI remains up 13% year-to-date, while Brent crude has gained 16% during the same period.

The Energy sector (XLE) remains the year's best performer, up nearly 40% year-to-date.

Ines is a markets reporter covering equities. Follow her on Twitter at @ines_ferre

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