Oil prices tumbled Tuesday with the U.S. benchmark falling below $100 as recession fears grow, sparking fears that an economic slowdown will cut demand for petroleum products.
West Texas Intermediate crude, the U.S. oil benchmark, settled 8.24%, or $8.93, lower at $99.50 per barrel. At one point WTI slid more than 10%, trading as low as $97.43 per barrel. The contract last traded under $100 on May 11.
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International benchmark Brent crude settled 9.45%, or $10.73, lower at $102.77 per barrel.
Ritterbusch and Associates attributed the move to "tightness in global oil balances increasingly being countered by strong likelihood of recession that has begun to curtail oil demand."
"[T]he oil market appears to be homing in on some recent weakening in apparent demand for gasoline and diesel," the firm wrote in a note to clients.
Both contracts posted losses in June, snapping six straight months of gains as recession fears cause Wall Street to reconsider the demand outlook.
Citi said Tuesday that Brent could fall to $65 by the end of this year should the economy tip into a recession.
"In a recession scenario with rising unemployment, household and corporate bankruptcies, commodities would chase a falling cost curve as costs deflate and margins turn negative to drive supply curtailments," the firm wrote in a note to clients.
Citi has been one of the few oil bears at a time when other firms, such as Goldman Sachs, have called for oil to hit $140 or more.
Prices have been elevated since Russia invaded Ukraine, raising concerns about global shortages given the nation's role as a key commodities supplier, especially to Europe.
WTI spiked to a high of $130.50 per barrel in March, while Brent came within striking distance of $140. It was each contract's highest level since 2008.
But oil was on the move even ahead of Russia's invasion thanks to tight supply and rebounding demand.
High commodity prices have been a major contributor to surging inflation, which is at the highest in 40 years.
Prices at the pump topped $5 per gallon earlier this summer, with the national average hitting a high of $5.016 on June 14. The national average has since pulled back amid oil's decline, and sat at $4.80 on Tuesday.
Despite the recent decline some experts say oil prices are likely to remain elevated.
"Recessions don't have a great track record of killing demand. Product inventories are at critically low levels, which also suggests restocking will keep crude oil demand strong," Bart Melek, head of commodity strategy at TD Securities, said Tuesday in a note.
The firm added that minimal progress has been made on solving structural supply issues in the oil market, meaning that even if demand growth slows prices will remain supported.
"Financial markets are trying to price in a recession. Physical markets are telling you something really different," Jeffrey Currie, global head of commodities research at Goldman Sachs, told CNBC Tuesday.
When it comes to oil, Currie said it's the tightest physical market on record. "We're at critically low inventories across the space," he said. Goldman has a $140 target on Brent.