Oil prices fell on Monday as stress in the banking industry spilled over into the market on fears of a slowing economy and falling demand for energy. The price of benchmark Brent crude has lost 15 percent of its value this month and is trading at its lowest price since December 2021.
U.S. WTI crude oil futures fell more than 1.7 percent to below $66 a barrel on Monday. Brent oil lost about 1.4 percent of its value until early afternoon when it traded at about $72 per barrel. However, its morning price was lower than $71 per barrel, according to data from the specialized OilPrice portal.
The portal reminds us that the weak start to the new trading week came after the worst week for the oil market since the beginning of the year, with prices falling to the lowest level in the last 15 months following the news of the collapse of two regional banks in the USA, SVB and Signature, as well as liquidity problems in the Credit Suisse bank, one of the largest international lenders.
Accelerating recession
When oil prices fell last week, traders attributed it to hedge funds liquidating after being hit by huge swings in the bond market. Now, however, analysts say the banking turmoil could accelerate a recession and slow growth in oil demand.
According to analysts at the brokerage house PVM Oil Associates, the Wall Street Journal reports, the current oversupply and macroeconomic uncertainty are currently suppressing the price of oil.
At the same time, Bank of America predicts that Brent will average $100 per barrel during 2023. The expected price increase is a consequence of the recovery in demand for oil in China, along with a reduction in the oil supply from Russia, reports Kommersant, adding that the discount on Russian Ural oil is decreasing.
