(London) Oil prices fell on Friday, weighed down by turmoil in the banking sector, which does not seem to be over and which is driving investors away from risky assets like commodities.
By 6:30 a.m. EST, a barrel of North Sea Brent crude for May delivery was down 3.23% at $73.46.
Its American equivalent, a barrel of West Texas Intermediate (WTI), for delivery the same month, dropped 3.56% to 67.47 dollars.
Fears about the soundness of the banking sector resumed on Friday, with European stock markets falling sharply after a sharp increase in the cost of insurance against the risk of default (CDS) of several European banks.
Deutsche Bank shares fell more than 10% on Friday morning.
Both global crude benchmarks lost much of their gains this week as “contagion fears (in the banking sector) and recession risks continue to dampen demand for riskier assets,” says Han Tan, Exinity analyst.
Since the bankruptcy of the Californian bank Silicon Valley Bank (SVB), then of two American regional banks, followed by other turbulence in Europe, investors are abandoning risky assets such as raw materials, despite temporary resurgences of confidence.
The emergency takeover of Credit Suisse by its competitor UBS was indeed to signal the end of the crisis of confidence in the sector, and the absence of a stir after this rescue announced on Sunday had temporarily reassured the markets.
Another factor weighing heavily on crude prices: US Secretary of Energy Jennifer Granholm “has hinted that filling the United States’ Strategic Petroleum Reserves (SPRs) could take years,” said Stephen Brennock, of PVM Energy.
“The speculation arose because the steep price decline had caused the price of WTI to dip for some time below the range of $67-72 per barrel,” the limit the U.S. government had set in the fall. as the condition to be met for the purchase of crude for the replenishment of reserves, explains Carsten Fritsch, of Commerzbank.
Failure to purchase crude to replenish SPRs, which are currently at their lowest level since December 1983, thus represents “a blow to the outlook for oil demand,” Brennock continued.
“In any event, the pressure on China to do the heavy lifting on the demand side over the next few months will be further increased,” he adds.
