The West Texas Intermediate for March delivery lost 1.83 U.S. dollars, or 2.15 percent, to settle at 83.31 U.S. dollars a barrel on the New York Mercantile Exchange. Brent crude for March delivery dropped 1.62 U.S. dollars, or 1.84 percent, to close at 86.27 dollars a barrel on the London ICE Futures Exchange.
Stock markets in Europe and the United States slumped on Monday while gold price and the U.S. dollar firmed up.
"Oil seemed to take a hit when the stock market got shaky this morning. Overseas markets went down. We've seen a big risk-off in the cryptocurrency space and that has at times shaken the confidence of the oil market this morning," said Phil Flynn, senior market analyst with The PRICE Futures Group on Monday.
Crude oil prices became technically overbought last week and were due for a trading correction, which started to unfold, according to Colin Cieszynski, chief market strategist at SIA Wealth Management.
A general rotation of capital out of equities and commodities and into defensive havens like bonds and gold appears to be the catalyst for the correction, said Cieszynski.
Still, Flynn said the stock market worries are going to give way to the realities of tight supplies.
With spare oil production capacity dwindling, inventories at a low point, and geopolitical tensions in the Ukraine rising, Brent oil futures prices will reach 120 U.S. dollars per barrel by mid-2022, said Francisco Blanch, commodities and derivatives strategist with the Bank of America (BofA) Europe.
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