Crude oil futures tumbled more than 2% Monday after an early rally fizzled, declining as equity markets fell and the U.S. dollar surged to fresh 20-year highs while fears of a recession overwhelmed all other factors.
Front-month Nymex crude (CL1:COM) for November delivery closed -2.6% to $76.71/bbl, its lowest settlement value since January 3, and November Brent crude (CO1:COM) -2.4% to $84.06/bbl, its weakest settlement since January 11.
Energy stocks ended as the day's second worst performer on the S&P sector standings, led by Baker Hughes (BKR) -5.9%, Halliburton (HAL) -5.1% and Devon Energy (DVN) -4.3%, after the group finished -10% last week.
The ICE U.S. Dollar Index topped 114 to touch another 20-year high on Monday, and the British pound sank to a record low against the dollar.
The drop in oil prices is a "macro move led by a stronger dollar," which is triggering fears of a recession, according to Energy Aspects co-founder Amrita Sen.
Meanwhile, the European Union continues to struggle with reaching an agreement on Russian oil price caps, and likely will be unable to reach a deal without a broader sanctions package.
Velandera Energy Partners' Manish Raj has said geopolitical tensions "in monstrous proportions, inflation at a multi-decade high and the dollar surging unabated are all certain to cause demand destruction for oil."
Exxon Mobil (XOM) shares fell for the eighth straight day, enduring their longest losing streak since 2020.