On April 5, This ‘X’ Pattern Changes Everything

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Wed, April 5 at 4:00PM ET

Why Are Oil Stocks Down Today?

  • Amid fears of an imminent global recession, oil stocks are declining meaningfully today.
  • Other negative catalysts may weigh on oil prices in the near-term.
  • Oil prices are closing in on $100 per barrel.
Oil stocks - Why Are Oil Stocks Down Today?

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Amid fears of an imminent global recession, oil stocks and oil prices are declining meaningfully today. Investors are worried that a global economic contraction would cause demand for oil to shrink.

Citi is predicting that oil prices could tumble to $65 per barrel in 2022 if a recession materializes, Barron’s reported today. The price of West Texas Intermediate oil has fallen more than 7% to just more than $100 so far this morning.

The uptake of commodities are usually much weaker during recessions, Citi noted. While Citi itself doesn’t expect a recession to occur this year, many other firms, including Morgan Stanley and Deutsche Bank, do anticipate such a development.

Near-Term Factors May Weigh on Oil Stocks

The Organization of the Petroleum Exporting Countries (OPEC), along with Russia, may announce increases in its exports in the near-term. Additionally, President Joe Biden’s trip to Saudi Arabia, slated to take place next week, may result in the country committing to increasing its petroleum output.

Meanwhile, Russian oil producer Rosneft disclosed yesterday that it had uncovered a new oil deposit with 82 million tons of petroleum. Although Europe is weaning itself off Russian oil, India and China are still buying it from the country.

Brent Oil Prices and Oil Stock Prices

The price of Brent oil has so far fallen more than 8% to about $104 this morning. In mid-morning trading, Exxon Mobil (NYSE:XOM) dropped 4.4% to $83.70 and Chevron (NYSE:CVX) gave back 4.4%, falling just below $140. BP (NYSE:BP) retreated 6% to less than $27, and Occidental Petroleum (NYSE:OXY), in which renowned investor Warren Buffett has a major stake, sank 5.5% to $57.

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.

Larry Ramer has conducted research and written articles on U.S. stocks for 15 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been PLUG, XOM and solar stocks. You can reach him on Stocktwits at @larryramer.

Article printed from InvestorPlace Media, https://investorplace.com/2022/07/why-are-oil-stocks-down-today-4/.

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