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Live news: Oil sinks more than 5% in biggest one-day drop in more than a year

by Stella Morgan

Oil Prices Experience Steepest Decline in Over a Year

In a surprising turn of events, oil prices experienced their sharpest fall in more than a year, settling near $85 a barrel and erasing gains that had been made over the past month. This sudden decline is causing concern among major energy companies and investors, as well as dragging down the overall performance of the S&P 500.

On Wednesday, Brent crude, the international benchmark, plummeted 5.6 percent to settle at $85.81 per barrel. This drop marks the sharpest decline since August 2022. Just last week, it had come close to reaching the $100 mark, hitting an intraday high of $97.69 on Thursday. Similarly, West Texas Intermediate, the United States marker, experienced a 5.6 percent fall to $84.22 per barrel, marking its largest decline since September 2022.

This unexpected drop not only wiped out the gains that had accumulated over the past month but also caused major concerns for the industry. The decline comes shortly after Saudi Arabia and Russia, two major oil-producing countries, had committed to extending voluntary cuts in production. The understandings reached between these two nations were thought to provide stability and support to oil prices. However, the recent decline has thrown these assumptions into question.

As a result of this sharp decline, energy stocks within the S&P 500 have also taken a hit. Companies such as ConocoPhillips, ExxonMobil, and Chevron saw their stock prices drop by 4.7 percent, 4.2 percent, and 2.9 percent, respectively. This decline further weakens the performance of the index, affecting both energy-focused investors and the broader market.

The reasons behind the sudden decline in oil prices are complex and multifaceted. Some speculate that concerns over the resurgence of COVID-19 cases and the potential impact on global economic recovery have played a role in the drop. Others point to increasing oil supplies, as well as pressure on major oil-consuming countries to transition towards cleaner energy sources.

Furthermore, geopolitical factors, such as tensions between the United States and China, can also influence oil prices. Any potential disruption to trade or economic activity between these two global powers can have a ripple effect on the demand and supply of oil, impacting prices.

In conclusion, the recent steep fall in oil prices has caught many by surprise and has raised concerns within the industry. The erasure of gains made over the past month, in addition to the negative impact on energy stocks, has generated uncertainty for investors. Understanding the multitude of factors influencing oil prices will be crucial for accurately predicting and responding to future fluctuations in this volatile market.

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