But the Russia/Ukraine conflict is expected to send prices skyrocketing soon: File Image/Pixabay
Tighter monetary policy in the U.S. was cited as one reason why West Texas Intermediate prices on Monday fell 2.2 percent, with a strong dollar contributing to the sell-off.
However, analysts warned to expect huge increases in both benchmarks in coming days, as hostilities between Russia and Ukraine escalate.
Ryan Fitzmaurice, a commodities strategist at Rabobank, pointed out that "Any escalation in Ukraine/Russia tensions is likely to send oil and gas prices skyrocketing as Europe scrambles to secure much needed energy supplies" – a remark made just hours before news reports of U.S. troops being put on heightened alert to face Russian aggression.
Amin Nasser, chief executive officer, Saudi Aramco
We are getting very close to pre-pandemic levels
After the S&P entered a correction phase on Monday, WTI fell $1.83 to settle at $83.31 per barrel, while Brent decreased $1.62 to $86.27 per barrel.
This prompted Giovanni Staunovo, commodity analyst at UBS Group, to remark, "Crude oil together with other cyclical commodities such as copper are suffering from the risk-off environment.
"Commodity market participants have shifted their focus away from geopolitical to economic growth concerns."
While supply shortages and corresponding inflation lie at the heart of the issues influencing crude trading, U.S. producers continue to address the situation squarely, by using almost all of their fracking equipment and crews available to expand exploration; Halliburton Co. executives said that North American oil drillers will likely increase spending by over 25 percent this year, compared to overseas explorers on course for an increase in the mid-teens.
Also, Schlumberger disclosed that it will boost spending as much as 18 percent in order to prepare for the several years of growth it expects from international clients.
Amin Nasser, chief executive officer of Saudi Aramco, told reporters on Monday that in terms of global demand "We are getting very close to pre-pandemic levels; we continue to see healthy demand in the future."
He added that despite rampant inflation there is no sign consumers are cutting back on oil, but he reiterated an earlier remark that crude could climb even more if Western governments and energy companies pull back from fossil fuel investment too quickly.
For his part, Olivier Le Peuch, chief executive of Schlumberger, said he anticipates an industry "supercycle" given the many forecasts that peg demand as exceeding pre-pandemic levels before the end of the year.