scorecardresearchOil fluctuates as US seeks to calm markets after banking turmoil

Oil fluctuates as US seeks to calm markets after banking turmoil

Updated: 13 Mar 2023, 09:34 AM IST
TL;DR.

The banking turmoil has added further volatility to the oil market, which has been whipsawed this year by concerns over tightening monetary policy in the US and optimism around China’s economic recovery.

Oil prices rose on Wednesday as sanctions on Russian banks following Moscow's invasion of Ukraine hampered trade finance for crude shipments and some traders opted to avoid Russian supplies in an already tight market. Brent crude futures climbed $3.55, or 3.4 percent, to $108.52 a barrel at 0135 GMT, scaling highs not seen since July 2014. US West Texas Intermediate (WTI) crude futures were up $3.75, or 3.6 percent, to $107.16, after peaking at $107.55 in early trade, the highest since July 28, 2014.

Oil prices rose on Wednesday as sanctions on Russian banks following Moscow's invasion of Ukraine hampered trade finance for crude shipments and some traders opted to avoid Russian supplies in an already tight market. Brent crude futures climbed $3.55, or 3.4 percent, to $108.52 a barrel at 0135 GMT, scaling highs not seen since July 2014. US West Texas Intermediate (WTI) crude futures were up $3.75, or 3.6 percent, to $107.16, after peaking at $107.55 in early trade, the highest since July 28, 2014.

(Bloomberg) -- Oil fluctuated as traders weighed steps by the US to shore up the financial sector following the collapse of Silicon Valley Bank and whether measures are enough to prevent the fallout rippling across markets. 

US authorities announced late Sunday efforts aimed at strengthening confidence in the banking system, pledging to protect all depositors at SVB, the biggest US bank collapse since the 2008 financial crisis. West Texas Intermediate futures swung between gains and losses near $77 a barrel on Monday.

The banking turmoil has added further volatility to the oil market, which has been whipsawed this year by concerns over tightening monetary policy in the US and optimism around China’s economic recovery. Most are bullish on the longer term outlook, with Saudi Aramco forecasting consumption will probably hit a record of 102 million barrels a day by the end of 2023.

“Fears of further monetary tightening, coupled with risks of a financial contagion, raised concerns of demand weakness,” said Charu Chanana, market strategist for Saxo Capital Markets Pte. Measures by US regulators to address the fallout from SVB provided some respite to the market, she added.

The Organization of the Petroleum Exporting Countries and the International Energy Agency are scheduled to release monthly market reports this week, providing investors with a snapshot on the outlook for supply and demand.

 

First Published: 13 Mar 2023, 09:33 AM IST