Oil prices are tumbling for the second consecutive day, leaving many oil stocks down again on Tuesday, with both West Texas Intermediate (WTI) and Brent crude falling below the key $100-per-barrel mark. Yesterday, the Energy Information Administration predicted that America’s shale oil output would increase at the highest rate next month in over two years. The agency makes predictions about the production of the seven biggest shale sites in the U.S.
Also yesterday, China announced that its manufacturing center, Shenzhen, would be locked down due to the renewed spread of Covid-19. The news, along with lockdowns in other Chinese cities in recent days, caused investors to bet that China’s demand for petroleum could fall sharply.
Why Are Oil Stocks Down Today?
Additionally, there has been some speculation that Saudi Arabia and the United Arab Emirates could respond to the higher prices by pumping more oil. According to reports, United Kingdom Prime Minister Boris Johnson will travel to the two nations tomorrow in an effort to convince them to increase their oil output.
Finally, signs of progress in the negotiations between Russia and Ukraine may be putting downward pressure on oil prices. In particular, on March 13, Ukrainian “negotiator and presidential adviser Mykhailo Podolyak” reportedly said in an online video that “Russia is already beginning to talk constructively. I think that we will achieve some results literally in a matter of days.”
Among the major oil stocks down at least 3% today are Exxon Mobil (NYSE:XOM), Chevron (NYSE:CVX), Marathon Oil (NYSE:MRO), Schlumberger (NYSE:SLB) and Occidental Petroleum (NYSE:OXY).
On the date of publication, Larry Ramer did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.