Yesterday, oil prices fell further as speculators fled the uncertain market, while Russia stated that it wants the Iran nuclear deal inked as quickly as possible.
The event is coming after Nigeria failed to meet the Organization of Petroleum Exporting Countries (OPEC) 1.8 million barrels per day oil production target in February 2022, producing just 1.258 million barrels per day.
Nigeria’s oil output declined by 10.07% last month compared to the 1.399 million barrels per day it produced in January, according to the OPEC Monthly Oil Market Report issued Tuesday.
Brent crude, the global standard, sank around 8% at $98.87, a barrel, its lowest level since late February. The U.S. standard, West Texas Intermediate oil, was down by more than 8% at $94.43 per barrel.
Crude prices have dropped by more than 20% in the last week, erasing much of the increase that followed Russia’s invasion of Ukraine.
In addition, an epidemic of the Omicron strain of the coronavirus has put tens of millions of people in regions and cities to lockdowns, including Beijing, Shanghai, and Shenzhen.
Meanwhile, the majority of the geopolitical premium associated with Russia’s invasion of Ukraine has been lost in a very volatile market, causing many speculators to flee. Concerns over Chinese demand weighed on morale, as did repeated lockdowns.
Oil Prices increased since Ukraine-Russia war
Open interest in oil has dropped to the lowest since 2015, after futures exchanges have raised initial margins significantly since Putin’s war in Ukraine began, thus making trading the same amount of oil futures much more expensive.
Moreover, the spike in oil prices and the heightened volatility has led many hedge funds and speculators to close out long or bullish positions. Last Monday, Brent Crude traded below its 21-day simple moving average (SMA) for the first time since Russia attacked Ukraine, Ole Hansen, Head of Commodity Strategy at Saxo Bank, said. “The war premium continues to deflate as speculators head for the hills and after the recent surges in diesel and gasoline have raised some demand concerns.”