Earlier this month, global oil prices hit a 13-year high of nearly $140 a barrel. This week, they’ve backed off substantially.

As this issue of Energy and Income Advisor goes to post, Brent crude has dropped back to a level just north of $100. And West Texas Intermediate Crude at the Cushing hub has come back to the mid-$90s.

Energy stocks by and large have lagged the gains in commodity prices thus far in the cycle. But while holding their ground better on the retreat, they’ve also sold off from the highs of earlier this month. The S&P Energy Sector Index, for example, is still up almost 30 percent year to date. But it’s also down more than -10 percent from the high point earlier this month. The Alerian MLP Index of major dividend-paying midstream stocks has also lost about -10 percent of its value from the same date, reducing its 2022 gain so far to about 9 percent.

One catalyst for oil’s retreat is China’s most recent lockdowns to prevent spread of Covid-19, including the manufacturing hub and major port city of Shenzhen near Hong Kong. Another is yesterday’s statement in OPEC’s monthly report that “the effects of the (Russian/Ukrainian) conflict and especially the impact of rising inflation, if sustained, will lead to a decline in consumption” of energy.

Those are legitimate concerns for energy markets in light of recent history. Oil prices’ spike towards $150 a barrel in 2008, for example, arguably greatly worsened the global financial crisis that followed later that year, which sent oil prices briefly as low as $30. And the massive drop in demand due to the pandemic in 2020 actually drove benchmark North American oil briefly negative.