Oil Prices Soar Then Plunge 13% in One Day... "Volatility Remains"

[Asia Economy New York=Special Correspondent Joselgina] International oil prices, which had soared due to Russia's invasion of Ukraine, plummeted by as much as 13% in just one day. This was a result of confirmed possibilities of increased production by major oil-producing countries and Ukraine's indication of some compromise to end the war with Russia.

On the 9th (local time) at the New York Mercantile Exchange, the April West Texas Intermediate (WTI) crude oil price closed at $108.70 per barrel, down $15 (12.1%) from the previous session. This is the largest daily drop since November 26 of last year.

The decline in Brent crude, the international oil price benchmark, was even greater. The May Brent crude on the London ICE Futures Exchange fell $16.8 (13%) to $111.1 per barrel compared to the previous session. Just two days ago, Brent crude hit $139 per barrel, nearing the $140 mark, but on this day it recorded the largest daily drop since April 2020.

This sharp decline in oil prices is analyzed as a reflection of expectations that major oil-producing countries will soon increase production. On the same day, the United Arab Emirates (UAE) announced it would urge OPEC Plus (+) oil-producing countries to increase production more quickly. Iraq also confirmed that it could increase production if requested by OPEC+ producers.

Ed Moya, senior market analyst at OANDA, conveyed the mood in an investor memo, stating, "The world is cooperating to cope with soaring oil prices." The International Energy Agency (IEA) had earlier decided to release 60 million barrels from strategic reserves and indicated that additional releases might be possible.

Additionally, Ukrainian President Volodymyr Zelensky reiterated in an interview with foreign media that he could compromise to end the war, which also exerted downward pressure on oil prices. DailyFX evaluated, "Ukraine's continued openness to a 'diplomatic solution' added a ray of hope, temporarily easing fears of inflation and rising commodity prices."

However, market experts assess that volatility in the oil market remains high as Russia's invasion of Ukraine is not expected to end in the short term. Tyler Riche, co-editor of The Sevens Report, pointed out, "If the situation between Russia and Ukraine worsens significantly, oil prices will quickly rise toward previous highs." Earlier, Bank of America (BoA) predicted that international oil prices could rise to $200 per barrel.

Meanwhile, as the decline in oil prices revived risk appetite, major indices on the New York stock market rallied by 2-3% on the day.

This content was produced with the assistance of AI translation services.