Oil prices crater as banking fears rattle markets

2023-March-16 09:34 By: Xinhua

NEW YORK, March 15 (Xinhua) -- Oil prices suffered steep losses on Wednesday, pressured by mounting fears of a banking crisis.

The West Texas Intermediate (WTI) for April delivery dropped 3.72 U.S. dollars, or 5.22 percent, to settle at 67.61 dollars a barrel on the New York Mercantile Exchange, reaching its lowest level since December 2021.

Brent crude for May delivery lost 3.76 dollars, or 4.85 percent, to close at 73.69 dollars a barrel on the London ICE Futures Exchange.

The pullback came after a major rout on the oil market, which saw the U.S. crude benchmark and Brent both shed more than 4 percent on Tuesday.

Turbulence at Credit Suisse fueled fears of a wider banking crisis.

Shares of Credit Suisse on Wednesday plunged to a record low after a top shareholder of the embattled Swiss bank said it would not make further investments in the firm.

The turmoil came just days after the failure of several U.S. banks, which continues to send shock waves through the financial system.

"Another day another bank failure. The banking crisis is causing a deleveraging by big banks, pulling back their exposure to oil and causing prices to fall harder than other risk assets," Phil Flynn, senior analyst at The PRICE Futures Group, said Wednesday.

"The oil moves smack of market liquidation as opposed to anything directly related to current supply demand fundamentals," he said.

Traders overlooked data that showing a drawdown in U.S. oil product inventories.

The U.S. Energy Information Administration reported Wednesday that the country's total motor gasoline inventories decreased by 2.1 million barrels during the week ending March 10, while distillate fuel inventories fell by 2.5 million barrels.

Recent oil weakness "illustrates the extent to which oil prices have been influenced by the financial markets of late," echoed Carsten Fritsch, energy analyst at Commerzbank Research.

He noted that when financial markets went into crisis mode, oil came under selling pressure as a risky asset.

"In view of this, high volatility can also be expected in the coming days, with fundamental data likely to play only a subordinate role," Fritsch said.

Editor: WXL
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