Oil prices stabilize, post big weekly losses on fears of banks

Natalie Portman
By Natalie Portman 3 Min Read
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By Laura Sanicola

(RockedBuzz via Reuters) – Oil prices fell on Friday, reversing earlier gains of more than $1 a barrel as banking sector concerns led both benchmarks to their biggest weekly declines in months.

Brent crude futures fell $1.73, or 2.3%, to $72.97 a barrel. US West Texas Intermediate crude oil fell $1.61, or 2.4%, to $66.74.

At the low of the session, both benchmarks were down more than $3. Brent crude was down nearly 12% on the week, the biggest weekly drop since December. WTI futures are down 13% since Friday’s close, the most since last April.

“The underlying fundamentals aren’t as dire as what’s being priced here, but there is concern that oil isn’t as safe a place as cash or gold,” said John Kilduff, a partner at Again Capital LLC in New York.

Oil prices followed equity markets lower, burdened by the banking sector crisis and fears of a possible recession.

All three indices were sharply lower in afternoon trading, with financials falling the most among major S&P 500 sectors following the collapse of Silicon Valley Bank (SVB) and Signature Bank and with difficulties for Credit Suisse and First Republic Bank.

Prices had recovered some ground after support measures from the European Central Bank and US lenders, but fell again as SVB Financial Group said it had filed for reorganisation.

The pressure stemmed from the “permanently fragile state of the market,” said Ole Hansen, head of commodities strategy at Saxo Bank.

Analysts still expect tight global supply to support oil prices for the foreseeable future.

OPEC+ members attributed this week’s price weakness to financial drivers rather than any supply-demand imbalance, adding that they expected the market to stabilise.

WTI’s drop this week to below $70 a barrel for the first time since December 2021 could spur the US government to start replenishing its strategic oil reserve, boosting demand.

And analysts expect the recovery in Chinese demand to add support to prices, with US crude exports to China heading for a nearly two-and-a-half-year high in March.

Saudi Arabia and Russia at a meeting on Thursday affirmed their commitment to OPEC+’s decision last October to cut production targets by two million barrels a day through the end of 2023.

An OPEC+ monitoring panel will meet on April 3.

(Reporting by Laura Sanicola in Washington and Rowena Edwards in LondonAdditional reporting by Florence Tan and Trixie Yapin SingaporeEditing by David Goodman and David Gregorio)

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