(LONDON) Oil prices fell again on Friday, even briefly slipping by more than 4%, as investors proved reluctant to take risks before the weekend, in view of a still feverish banking sector.
By 12:20 p.m. EST (5:20 p.m. Paris), a barrel of North Sea Brent crude for May delivery was down 2.13% at $73.11.
Its American equivalent, a barrel of West Texas Intermediate (WTI), for delivery in April, lost 1.95%, to 67.02 dollars.
Both global crude benchmarks have tumbled around 12% since closing last Friday, hitting new lows since December 2021 at $71.40 a barrel for Brent, and $65.17 for WTI.
“Troubles in the banking sector have increased the risk of a significant economic slowdown or recession this year,” said Craig Erlam, analyst at Oanda.
This new price drop suggests that “investors are not convinced that the worst is behind us, […] especially as we approach a weekend where anything can happen, as we saw there. a week,” he continues.
Last Friday, in fact, the Silicon Valley Bank (SVB) was closed by the American authorities, the largest bank failure in the United States since the financial crisis of 2008, sending a wind of panic through the markets.
Several American regional banks remain under pressure, such as First Republic, as well as the giant Credit Suisse.
Crude prices had however started the European session on the rise, the market reassured by the decision of eleven major American banks to come together to the rescue of First Republic and thus prevent it from becoming the next domino to fall after three bankruptcies of in a row.
But the sigh of relief was only short-lived, with First Republic once again finding themselves in dire straits.
“Banking turmoil isn’t going away anytime soon,” as are “fears that the Fed’s interest rate hike cycle is starting to weaken the economy,” says analyst Edward Moya. for Oanda.
The market awaits the US central bank’s monetary policy decision next week and expects further tightening, although the current banking crisis and fears of recession may cause governors to be cautious.