Oil prices: 'Demand destruction' is weighing right now
Oil prices are tumbling amid a strong dollar and "demand destruction" as recession fears grow. Brent crude (BZ=F) fell below $100 per barrel on Wednesday for the first time since April, while U.S. crude futures (CL=F) dipped below that level on Tuesday.
"We're getting to the point where demand destruction is now starting to factor into a lot of the economic concerns being weighted into oil prices," Rohan Reddy, Global X ETFs director of research told Yahoo Finance Live.
Despite supply side concerns more of the concern right now is "a very strong dollar [and] hawkish Fed," said Reddy. "We do think that's actually weighing on oil prices a lot right now."
The recent decline in crude comes on the heels of a spike in the U.S. dollar against other currencies. A stronger greenback puts pressure on the price of oil, which is traded in dollars.
Ready predicts the greenback is unlikely to persist at such high levels that much longer. He also points out China's economy will add upward pressure to crude prices going forward.
"We're relatively positive on the price of oil over the next 6-12 months, but we do believe there is going to be a lot more volatility in oil prices," said Reddy.
Analysts have been predicting how low prices could go if the world falls into a recession, with Citi recently forecasting $65 per barrel by year end.
Ines is a markets reporter covering equities. Follow her on Twitter at @ines_ferre
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