Oil Prices Drop to Levels Not Seen in Months

Brent crude and West Texas Intermediate (WTI) oil prices both dropped to levels not seen in months on Thursday.

Brent closed at $94.12 per barrel and WTI closed at $88.54 per barrel on August 4. Thursday’s close marked the first time Brent and WTI have finished the day’s trading under $95 per barrel and $89 per barrel, respectively, since February this year.

At the time of writing, the price of Brent crude was trading at $94.66 per barrel, while the price of WTI was trading at $89.07 per barrel. After starting December at under $70 per barrel, Brent soared to $127.98 per barrel on March 8. During the same timeframe, the price of WTI rose from under $67 per barrel to $123.7 per barrel.

Russian forces escalated a conflict with Ukraine near the end of February this year, which saw both Brent and WTI prices rise.

According to the U.S. Energy Information Administration’s (EIA) latest short term energy outlook (STEO) which was released in July, the EIA sees Brent and WTI spot prices averaging $104.5 per barrel and $98.79 per barrel this year, respectively. Brent spot prices are expected to dip to $93.75 per barrel in and WTI spot prices are expected to drop to $89.75 per barrel in 2023, the STEO highlighted. The 2021 Brent spot average price was $70.89 per barrel and the 2021 WTI spot average price was $68.21 per barrel, the EIA pointed out in its latest STEO.

The EIA highlighted that its July STEO was subject to heightened uncertainty “resulting from a variety of factors, including Russia’s full-scale invasion of Ukraine”.

“The possibility of economic activity being less robust than assumed in our forecast could result in lower-than-forecast energy consumption. Factors driving uncertainty about energy supply include how sanctions affect Russia’s oil production, the production decisions of OPEC+, and the rate at which U.S. oil and natural gas production rises,” the EIA noted in its July STEO.

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