HOUSTON: Oil prices fell 5% to their lowest level in more than a year as worries about Credit Suisse spooked world markets and cancelled out hopes for a recovery in Chinese oil demand.
Credit Suisse’s biggest investor said it couldn’t give the Swiss bank any more money. This caused Credit Suisse’s shares and other European stocks to fall.
Phil Flynn, an analyst at Price Futures Group, said, “We have definitely seen the oil market separate from oil inventories, and we’re more worried about a larger meltdown of the global economy.”
At 10:53am ET, the price of a barrel of Brent crude fell $3.53, or 4.6%, to $73.92. (14:53 GMT). At $67.87, US West Texas Intermediate (WTI) crude was down $3.46, or 4.9%. Both benchmarks fell for three days in a row and hit their lowest points since December 2021.
According to Dennis Kissler, senior vice president of trading at BOK Financial, hedge funds were selling off their assets because interest rates were going up. He also said that heavy pressure on US stocks this morning was adding to the fund selling off in crude.
The US dollar also got stronger against a group of other currencies. This factor made it more expensive for people with those currencies to buy crude oil.
Earlier, oil prices went up because data showed that China’s economy picked up in the first two months of 2023.
Also, US crude stockpiles went up by 1.6 million barrels in the week ending March 10. That brings the total to 480.1 million barrels. A Reuters poll of analysts had predicted a rise of 1.2 million barrels.
On Tuesday, the American Petroleum Institute released figures showing that crude stocks rose by about 1.2 million barrels. This data is of over the past week.
On Tuesday, both benchmarks had lost more than 4%, putting them at their lowest levels in three months. This was because people were worried that the failure of Silicon Valley Bank (SVB) last week and other US bank failures could start a financial crisis that would hurt demand for fuel.
The International Energy Agency’s monthly report, which came out on Wednesday, pointed out that China’s oil demand is likely to go up. This came a day after OPEC raised its prediction for China’s oil demand in 2023.
