Oil prices continued to fall in choppy trading on Wednesday—extending recent losses as growing recession fears wreak havoc on markets, but despite concerns about an economic downturn hurting demand, most experts remain optimistic that prices will rebound by later this year.
The price of US benchmark West Texas Intermediate slid nearly 2% to trade at around $98 per barrel, while international benchmark Brent 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, with WTI falling below $100 per barrel for the first time in around two months.
Experts have largely attributed the selloff to growing recession fears, but many argue that nothing has yet fundamentally changed with regards to high demand and low supply globally.
Many Wall Street firms still expect prices to rebound by later this year, with the likes of Barclays, Goldman Sachs, UBS and RBC all predicting oil will trade at 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, Citi’s global head of commodity research, told Bloomberg 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 later this year, the outlook for next year is slightly more gloomy, with several firms predicting oil will fall below $100 per barrel in 2023.