Oil Dives as Banking Fears Overwhelm Crude Market’s Fundamentals
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(Bloomberg) -- Oil retreated for a second session, tracking a slide in equity markets and feeling the effects of a stronger dollar.
Crude eliminated most of its weekly gains as fresh signs of stress in the banking sector caused investors to move away from riskier assets ahead of the weekend. As long as banking concerns remain at the forefront of markets, crude fundamentals may have a limited effect on its price movements, analysts said.
“Oil prices continue to follow bank stocks, with fear leading to liquidation as nobody wants to hold risk over the weekend,” said Jonathan Wagner, global head of crude options at Marex North America. “Everyone is trying to stay ahead of the next wave of liquidation.”
Crude remains on course for its steepest first-quarter drop since 2020, when the pandemic wiped out demand. A potential US recession, robust Russian oil flows in the face of Western sanctions and strikes at refineries in France have all proved bearish forces.
Earlier this week, the US government signaled that refilling the Strategic Petroleum Reserve will take longer than previously expected. US Energy Secretary Jennifer Granholm said restocking the oil reserve this year at the administration’s target price of $70 a barrel will be “difficult.”
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