Oil prices continue to fall despite central bank action

Crude oil prices started another week off despite strong signs that central banks are stepping in to help troubled lenders in the US and Europe.

In Asian morning trading, Brent crude traded at $72.27 a barrel, while West Texas Intermediate traded at $66.06 a barrel, both down more than a percentage point from Friday’s close.

The weak start to the new trading week comes after oil’s worst week since the start of the year, with prices falling to a 15-month low following news of the demise of Silicon Valley Bank and Signature Bank in the United States , reports of runs on smaller banks and liquidity problems at one of the largest international lenders, Credit Suisse.

By the end of the week, central banks managed to allay the worst of the fears, it seems, and oil temporarily recouped some of its losses. The US Treasury Department assured the public that their deposits are safe, and UBS offered to acquire Credit Suisse for more than $3 billion, with the eager blessing of Swiss authorities, who predicted a sharp drop in the stability of the global banking system. wanted to turn around.

Meanwhile, central banks in the EU, US and elsewhere vowed to tackle the liquidity crisis that seems to be rampant everywhere and prevent another 2008-style industry collapse.

This has so far failed to support oil prices, suggesting that efforts to convince the public that all will be well are not exactly successful.

“The market focus is on the current volatility of the banking sector and the potential for further rate hikes by the Fed,” the National Bank of Australia’s head of commodities research told Reuters earlier today.

“The upcoming OPEC meeting is another potential catalyst for the outlook for the market. Further downside risk to prices increases the likelihood that OPEC will cut production further to support prices,” Baden Moore also said.

By Irina Slav for Oilprice.com

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