Crude oil prices fell by more than 1% during trading today, Monday, March 13 (2023), amid fears of a global recession.
The oil markets had climbed to the green zone earlier in today’s session, supported by the recovery of Chinese demand, but the collapse of the Silicon Valley bank raised fears of a new financial crisis and plunged prices.
Crude oil prices today
By 11:09 a.m. GMT (02:09 Mecca time), the prices of benchmark Brent crude futures – for May 2023 delivery – fell by about 1.09%, to reach $ 81.88 a barrel.
The price of US West Texas crude futures – delivery in April 2023 – decreased by 1.24%, to $ 75.73 a barrel, according to data viewed by the specialized energy platform.
Crude oil prices ended their trading, on Friday, March 10, with an increase of more than 1%, after a volatile session, with the decline of the US dollar, but it recorded weekly losses.
recession fears
Fears after the collapse of the Silicon Valley bank led to a sell-off in US assets at the end of last week, while regulators shut down Signature Bank in New York on Sunday.
The pan-European Stoxx index fell 5.7% after falling 3.8% on Friday, according to data seen by the specialized energy platform.
US authorities launched emergency measures on Sunday to boost confidence in the banking system.
Analysts from ANZ Bank said in a note Monday morning that market sentiment was already fragile, as concerns about further monetary tightening by the Federal Reserve were exacerbated by rising US crude oil inventories.
Pickling the oil market
“It’s like a battle of bullish data in the East meets bearishness in the West,” said Stephen Innes, Managing Partner of SBI Asset Management, commenting on the competing sentiment drivers in the crude oil market.
“From an oil trader’s perspective, the US dollar should decline as traders give up on accelerating Fed hikes; this in turn paves the way for more strong Chinese fundamentals to dominate commodity trading,” Innes added, according to Reuters.
A falling US dollar makes oil cheaper for holders of other currencies; What supports crude oil prices.
demand for oil
Comments on Sunday from Saudi Aramco CEO Amin Nasser on demand for crude from China provided some support.
“If you think about China’s opening up and improvement in jet fuel and the very limited spare capacity, we are talking about 2 million barrels, as I said we are cautiously optimistic in the short to medium term and the market will remain tightly balanced,” Nasser said.
The statements come in the wake of the announcement of Riyadh and Tehran’s agreement to restore diplomatic relations in a deal brokered by China. This could pave the way for reviving a nuclear deal that would allow the export of Iranian crude currently under sanctions.
The beginning of oil’s volatility this week comes after the positive momentum on Friday, when the US employment data came surprisingly to the upside.
February data beat expectations; Non-farm payrolls increased by 311 thousand, compared to expectations of an addition of 205 thousand jobs, according to a Reuters survey.
From a medium-to-long-term supply perspective, energy services company Baker Hughes said on Friday that US energy companies this week reduced the number of operating oil and natural gas rigs for the fourth consecutive week for the first time since July 2020.
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