Oil falls on market turmoil on banking fears

By: News Team

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Oil falls on market turmoil on banking fears

Oil prices fell along with stock markets on Monday as Silicon Valley Bank collapsed raised fears of a new financial crisis, although a recovery in Chinese demand provided some support.

At 1001 GMT, futures Brent crude lost $1.44, or 1.7 percent, to $81.34 a barrel, and those of the West Texas Intermediate (WTI) was subtracting $1.40, or 1.8%, from $75.28.

Fears of contagion from Silicon Valley Bank’s bankruptcy prompted a sell-off in U.S. assets late last week, while state regulators shut down New York’s Signature Bank on Sunday.

The European banking index STOXX was down 5.7 percent, after falling 3.8 percent on Friday. U.S. officials on Sunday launched emergency measures to shore up confidence in the banking system.

Market sentiment was already fragile as concerns about further monetary tightening by the Federal Reserve have been exacerbated by elevated U.S. crude inventories, analysts at ANZ Bank said in a note Monday morning.

“It’s like the battle between rising activity data in the East and macroeconomic malaise in the West,” said Stephen Innes of SPI Asset Management, commenting on mixed sentiments in the crude market.

In recent days, the weakness of the dollar, which makes oil cheaper for holders of other currencies, has lent some support to prices.

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