Oil benchmarks tumbled to their lowest in more than six months as demand concerns emanating from China prompted a wave of selling that turned into a frenzy as prices breached technical warning levels.

West Texas Intermediate extended losses to settle below $82 a barrel while Brent closed at $88, their lowest since January. A dollar gauge reached an all-time high on Wednesday, offering a macro headwind to commodities at a time when the oil market is grappling with potential slowing demand in China.

Traders lamented the market picture was darkening as oil formed what’s referred to as a “death cross” – a bearish technical signal where WTI’s 50-day moving average falls below its 200-day MA- for the first time since 2020.

“Elevated volatility is the story here,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth Management. “There is no way to have conviction and want to place bets when the market trades in huge ranges with limited liquidity. The risk reward is just not there.”

Crude has made a soft start to September, extending a run of three monthly losses that’s the longest streak in more than two years. With central banks jacking up rates to quell inflation, investors are concerned economies may tip into recession and slow crude demand. In China, one of the world’s largest oil consumers, virus curbs are damping demand, with centers from Chengdu to Shenzhen extending lockdowns or adopting movement controls.

As oil sheds all of the gains accrued since the invasion of Ukraine and heads back to levels seen at the start of the year, traders are evaluating if prices could fall much further. Despite the uncertainty in Chinese demand, another main oil buyer, the US, remains strong. “WTI crude should hold $80 given how strong the US economy remains and now that most of the demand shock from China’s deteriorating COVID situation has been priced in,” said Ed Moya, senior market analyst at Oanda.

Meanwhile, the US administration is attempting to build a coalition on a proposed oil price cap on Russian crude in order to limit Moscow’s ability to fund its war in Ukraine. Market participants see the move as largely symbolic as Russia has been capable of working around G-7 restrictions.

Prices erased a one-day rally on Monday driven by a decision from the Organization of Petroleum Exporting Countries and its allies on Monday to pare output. Reflecting the market softness, Saudi Arabia reduced prices for customers in Asia and Europe for next month’s shipments.

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