Despite concerns about an economic downturn hurting demand, most experts are optimistic that oil prices will rebound by the end of the year.
Many analysts are still bullish despite the pricing of oil markets.
The price of U.S. benchmark West Texas Intermediate slid 2% to trade at around $98 per barrel, while international benchmark crude now sits at just over $100 per barrel
The price action on Wednesday comes a day after both contracts posted their worst daily declines since March.
Many argue that nothing has changed with regard to high demand and low supply, despite experts blaming the selloff on recession fears.
According to many Wall Street firms, oil will trade between $110 and $130 per barrel by the end of 2022.
Even so, "almost everyone has reduced their expectations of demand for the year," Ed Morse, Citigroup's global head of commodity research, said in an interview on Wednesday, a day after the firm warned oil could fall to as low as $65 per barrel.
While prices are expected to rebound by late this year, the outlook for next year is slightly more gloomy, with several firms predicting oil will fall below $100 per barrel in 2023
The recent declines have been overshot according to analysts at Goldman. While risks of a future recession are growing, our bullish view is that the current oil deficit remains unresolved, with demand destruction through high prices the only solution left as inventories approach critically low levels.
According to Jeffrey Halley, senior market analyst at Oanda, the recent price action hints at panic and forced liquidation than a structural change in the tight supply-demand situation around the world. The oil supply situation doesn't seem to be about to undergo any dramatic shifts soon.
The price of oil has risen over 10% this year despite recent declines. Since early June, prices have been falling, with markets hard-hit by recession fears. Less than a month ago, the S&P 500 Energy sector was up over 65% for the year, but since then it has come crashing back down to earth. The sector that has been a bright spot for the market is not making a lot of investors happy.
The price of oil has fallen below $100 per barrel for the first time.
Warren Buffet is buying after oil prices go down.
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