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Oil plummets, erasing all 2022 gains as traders flee market

West Texas Intermediate settled near $74 on Tuesday, erasing all of this year’s gains. The slump comes against a backdrop of ever-dwindling liquidity in the oil market: Brent open interest is at the lowest since 2015, as traders strip their positions in the final month of the year.

December 07, 2022 / 08:18 AM IST
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Oil dropped to the lowest since last December as investors pared back crude positions amid a broader market sell-off.

West Texas Intermediate settled near $74 on Tuesday, erasing all of this year’s gains. The slump comes against a backdrop of ever-dwindling liquidity in the oil market: Brent open interest is at the lowest since 2015, as traders strip their positions in the final month of the year.

Prices grapple with risk of higher rates, low liquidity

Traders are “fleeing the market” because of the “absurd” price actions oil has recently experienced, Ed Morse, global head of commodity research at Citigroup Inc., said in a Bloomberg Television interview. “We are getting toward the end of the year, and those who made money this year did not want to lose any.”