Crude oil prices remained highly volatile on Tuesday as markets tried to balance between the uncertainty and consequences of a continued Fed tightening, the supply concerns triggered by the price cap on Russian crude oil and the likely revival in demand from an easing of restrictions in China.
Earlier, concerns regarding the implementation of the sanctions on Russian seaborne crude oil had triggered supply concerns causing both the crude oil benchmarks to rise more than half a percent. Economic uncertainty and the likely impact on demand soon outweighed sentiment, dragging down prices.
West Texas Intermediate Crude Oil Futures for January settlement plunged to $75.56 before recovering to its current level of $75.83, implying an overnight decline of 1.4 percent. The benchmark which was at $76.93 at previous close had touched a high of $77.88 in the day’s trade.
Brent Oil Futures for February settlement which had previously closed at $82.68 dropped to as low as $81.23, before recovering to its current level of $81.63, registering a decline of 1.3 percent. The day’s high was $88.44.
The decline in crude oil prices is despite the greenback’s retreat. The Dollar Index, which measures the Dollar against a basket of six currencies dropped 0.24 percent overnight to trade at 105.02. The Dollar’s weakness was not strong enough to lift the crude oil prices which remained overwhelmed by the economic uncertainty around Fed tightening.