Gas Prices Haven't Fallen This Fast Since COVID; Why Oil May Plummet To $65 Per Barrel This Year

Tuesday’s decline in oil prices comes as analysts consider the impact of a potential global recession on demand. Which may become a bigger factor than supply disruption concerns, such as an anticipated reduction in Norwegian production.

Brent Crude fell $10.58, or 9.32%, to $102.90 per barrel, while U.S. West Texas Intermediate (WTI) crude shed $9.25, or 8.53%, to $99.27 per barrel from Friday's close.

In stark contrast to JPMorgan Chase & Co.'s JPM bullish $380 per barrel scenario, Citigroup Inc. C analysts said Tuesday that crude might fall below $65 this year in the event of a recession.

"Currently, our US economists do not expect the US to dip into a recession but are also skeptical about the Fed's ability to engineer a modest slowdown, as the historical experience has been of hard rather than soft landings," analysts led by Francesco Martoccia said in the note.

Also read: ExxonMobil Vs. Valero: Which Oil Stock Has A Stronger Bull Case?

Though, as Americans struggle with the highest national gas averages in the history of the country, AAA says that U.S. retail gasoline prices have fallen for 21 consecutive days, the longest streak since April 2020.

Much-needed macro relief aside, prices remain 3% higher since the beginning of June and are up a staggering 46% year to date.

History may repeat: Barron’s noted that oil prices peaked during the financial crisis of 2007–2008 at over $160 a barrel before dropping sharply to under $40. Prices eventually stabilized for four years at $90 per barrel.

Photo: Courtesy of Damian Morys on Flickr