RTR: Oil prices slump as receding price-cap threat unmasks worsening demand

REUTERS reports:

Global oil prices have tumbled more than 20% as the threat to production from the G7 Russia price cap has receded allowing traders to refocus on the deteriorating outlook for consumption.

Front-month Brent futures prices have slumped to less than $78 per barrel from a recent high over $98 just a month ago on Nov. 4.

Brent’s six-month calendar spread has swung into a contango of 50 cents per barrel from a backwardation of more than $8 over the same period.

The collapse of spot prices and spreads is consistent with a cyclical downturn in the oil market and the onset of a business cycle slowdown or recession.

Chartbook: Global petroleum price cycle

The explosive cyclical upswing in both the economy and oil that began after the first wave of the coronavirus and lockdowns in the second quarter of 2020 appears to have peaked in the second quarter of 2022…

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