Crude oil entered a bear market in a rapid reversal, losing more than 20% from its October high and falling along with stocks.
After falling 1% to $ 65.57 a barrel on Wednesday, crude oil fell exactly 22.5% from a seven-year high of $ 84.65.
|USE||UNITED STATES OIL FUND LP||48.00||-0.30||-0.62%|
CHAIRMAN OF MODERNA WEIGHS ON OMICRON
However, oil watchers are skeptical that this bear market will last.
“A real bear market during the COVID-19 shutdown was an environment where we had a manufacturing war between Saudi Arabia in Russia and the shutdown of the world economy,” said Phil Flynn, senior energy analyst at The PRICE Futures Group and a FOX Business – Contributor, explains. “This bear market sell-off in oil came after a 12% drop in just a few days, mostly during an ultra-low volume period due to the holidays. If you have this type of sell-off while on vacation, be skeptical.”
|BNO||UNITED STS BRENT OIL FD LP UNIT||18.75||-0.04||-0.21%|
On Wednesday, the CDC confirmed the first US case of the Omicron variant in California, raising new questions about future demand that could force OPEC Plus to stop production, Flynn added.
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President Biden last month ordered a withdrawal from strategic oil reserves to combat skyrocketing energy prices, while appealing to OPEC to boost production. The cartel, which made no changes, meets on Thursday.
While Americans are grappling with the highest inflation in 31 years, a bear market in crude oil may not offer the long-term relief the country is seeking as gas prices hit a seven-year high.
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Federal Reserve Chairman Jerome Powell admitted that inflation is no longer “transitory” this week, suggesting higher prices for energy, food and other items may be with us well into 2022 could.
“I think the word ephemeral means different things to different people,” Powell told Sen. Pat Toomey, R-Pa. “For many, it has a time, a sense of ephemerality. We tend to use it to mean that it doesn’t leave a lasting mark in the form of higher inflation. I think it’s probably a good time to pull that word back . ” and try to explain more clearly what we mean. ”