West Texas Intermediate (
CL1:COM) has wiped out all of its gains of the year after dropping into the $60/bbl range for the first time since the beginning of January. Ample inventories and the end of the summer driving season also put
pressure on gasoline, which sunk to a near three-year low, in the latest headlines from the energy sector. "Oil recently formed a lower high, suggesting a potential retest of the descending trendline," SA analyst Dean Popplewell wrote in a fresh
technical analysis, while others are looking at the fundamentals.
Catalysts: There were several drivers that pushed crude below $70, where it has traded for much of the year. Reports pointed to progress towards a deal to resolve a dispute that has halted Libyan crude production and exports, as well as the likelihood that OPEC+ will boost production next month. Commodities also
fell broadly after Goldman Sachs warned that copper prices would suffer a sharp correction, prompting fears for the industrial bellwether that is used in EVs, power transmission and AI data centers.
Renewed growth worries were another big factor prompting the big moves. Those included concerns about weak global demand, particularly in top oil importer China, which hasn't been showing much signs of a revival. Over in the U.S., new data prompted concerns about an economic slowdown. American manufacturing production decreased for the
first time in seven months in August, while the ISM's Manufacturing PMI contracted for the fifth straight month.
Outlook: Growth worries haven't been limited to oil. U.S. stocks sold off in the first trading session of September, with the Nasdaq closing
down 3% following the Labor Day holiday. Leading the losses was Nvidia (
NVDA), which recorded the "largest one-day market cap drop for a U.S. stock in history" given its
staggering size. Remember that September is said to be a
historically weak month, but the benchmark S&P 500 did recently recover from "Black Monday 2024," with a steady rebound over the last few weeks that saw it even end August in positive territory. (
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