Oil fell to its lowest in 15 months as banking turmoil continued and the US dollar gained.
West Texas Intermediate crude futures erased early gains, falling below $70 a barrel for the first time since December 2021. Brent futures also dropped, hitting a three-month low.
Credit Suisse Group AG shares plunged and the Euro Stoxx Banks Index declined, stoking concerns about the global economy and oil demand. The International Energy Agency’s monthly Oil Market Report also struck a bearish tone, forecasting that global crude supply should “comfortably” exceed demand in the first half before tightening later this year.
The market is also facing another interest-rate hike from the Federal Reserve next week after US inflation gained, despite the impact on the financial industry from the collapse of Silicon Valley Bank.
Concerns are spreading that more than a decade of easy money, followed by a sharp increase in interest rates “won’t end nicely,” said Bjarne Schieldrop, chief commodities analyst at SEB AB. Linking that back to oil, the potential for tightening credit to the global economy would lead to reduced economic activity and thereby less demand, he said.
Meanwhile, Chinese economic data showed a recovery in consumer spending, industrial output and investment after coronavirus restrictions were dropped.
- WTI for April delivery fell 1.6 per cent to $70.16 a barrel at 12:06 p.m. in London.
- Brent for May settlement dropped 1.7 per cent to $76.15 a barrel
Oil has endured a bumpy year, whipsawed by aggressive monetary tightening from the Fed and optimism around China’s demand recovery.
In France, strike action continues, while Russia’s energy ministry expects oil production to fall this year, Interfax reported, citing Minister Nikolai Shulginov in State Duma.
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