Oil prices fell Monday to their lowest level in 11 months as further uncertainty in China roiled global markets, giving way to a silver lining for Americans’ wallets as U.S. gasoline looks poised to further fall from its record high in an otherwise worrisome sign for the global economy.
International benchmark Brent Crude fell 1.8% to $82 Monday, its lowest level since January 6.
That’s a 41% decline from its March peak of $139 per barrel as Russia’s invasion of Ukraine sent oil and other commodity prices skyrocketing.
The latest dip follows renewed concerns about demand for oil from the world’s largest oil importer China as the country continues to pursue a strict zero-Covid policy, with Brent already down nearly 15% in November as the Chinese government largely stands firm on its stringent pandemic policies even as rare protests against the measures pop up across the country.
The latest demand worries also bled into American markets, with U.S. benchmark West Texas Intermediate down 1.6% to $75 on Monday, while stock futures also slumped, with the Dow Jones Industrial Average and the S&P 500 each down about 0.5% early Monday.
Oil prices are “crumbling under the pressure of record Covid cases and huge economic uncertainty,” OANDA analyst Craig Erlam wrote Monday. “[China’s] commitment to zero-Covid has seriously damaged growth in the world’s second-largest economy and by extension, crude demand.”
What To Watch For
How the latest plunge affects U.S. prices at the pump. The average price for a gallon of gas was $3.55 Monday, according to AAA, down 6% from a month ago and 29% from June’s all-time high of $5.02 per gallon. Patrick De Haan, GasBuddy’s head of petroleum analysis, projects the national average could fall below $3 by Christmas in a “fast case” scenario. Soaring gas prices were one of the primary drivers of the worst inflation in the U.S. since the early 1980s.
Apple shares fell 1.4% Monday amid concerns about the fallout of protests at its largest Chinese iPhone manufacturer Foxconn. The political unrest in China will cause a reduction in iPhone sales of “at least 5%” and up to 5% this quarter, Wedbush analysts Dan Ives and John Katsingris wrote in a Monday note.