March 16, 2023
Yongchang Chin and Grant Smith, Bloomberg News
Source: www.bnnbloomberg.ca
Oil steadied near the lowest closing price in 15 months
after a three-day rout started by the U.S. banking crisis and accelerated by
options covering.
West Texas Intermediate futures hovered near US$67 a barrel
after tumbling around 12% over the previous three sessions. The turmoil whipped
up by the collapse of Silicon Valley Bank and fresh upheaval at Credit Suisse
Group AG has reverberated across global assets, with selling in oil gathering
pace as firms tried to limit their exposure in the options market.
“Prices are likely to
remain volatile given the dimensions of uncertainties over Fed actions, U.S.
banking turmoil, and China’s recovery,” Citigroup Inc. analysts Francesco
Martoccia and Ed Morse said in a note.
OPEC’s top official earlier this month flagged concerns
about slowing demand in Europe and the U.S., and investors will be watching to
see if the rout draws a response from the group and its allies. However,
traders are abandoning bets that the Federal Reserve will raise interest rates
amid the banking turmoil.
Further oil price gains may be limited in the near term,
with OPEC this week forecasting a modest surplus in the second quarter, a
typical period of soft demand before the summer. The International Energy
Agency on Wednesday said that the market was already in surplus on Russian
output.
Prices:
WTI for April delivery was little changed at US$67.53 a
barrel by 11:41 a.m. in London.
Brent for May settlement steadied at US$73.66 a barrel after
closing at the lowest level since December 2021 on Wednesday.
A long-term timespread for global benchmark Brent has
weakened during the recent selloff, narrowing to US$2.94 a barrel in
backwardation on Wednesday. That compares with US$5.26 at the end of last week.
U.S. crude inventories expanded by 1.55 million barrels last
week, according to data from the Energy Information Administration on
Wednesday. Net total oil exports, including crude and refined products, jumped
to 3.5 million barrels a day. That figure has been surpassed only once since
1990.
“We seem to be walking on thin ice right now, with the fragile
risk environment still trying to stabilize from the SVB fallout,” said Yeap Jun
Rong, a market strategist for IG Asia Pte in Singapore.
Source: https://bit.ly/3TsZF9p
( www.bnnbloomberg.ca )
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