Oil prices dip as Fed uncertainty mounts, bank fears persist
2023.03.20 23:13
© Reuters.
By Ambar Warrick
Investing.com– Oil prices fell in early Asian trade on Tuesday, cutting short a brief rebound from 15-month lows as markets hunkered down before a Federal Reserve interest rate decision this week, while concerns over a banking crisis continued to spur cautious trading.
Crude markets had attempted a recovery from 2021 lows on Monday, after regulatory measures to shore up liquidity and consolidate weak players in the banking sector helped ease some concerns over an imminent crisis.
But this was largely offset by uncertainty ahead of a pivotal Fed meeting this week, with investors waiting to see how the bank will alter policy in the face of a potential banking breakdown.
fell 0.8% to $73.23 a barrel, while fell 0.8% to $67.31 a barrel by 22:09 ET (02:09 GMT). Both contracts rose about 1.1% and 0.5%, respectively, after a choppy session on Monday.
Prices were languishing near 2021 lows as banking sector ructions played into fears that a global economic slowdown will dent oil demand this year.
Markets were also pricing in a potential by the Fed on Wednesday, with the central bank expected to keep tackling high inflation a main priority, despite pressure on the banking system.
The Fed, coupled with several other major central banks, also rolled out emergency liquidity measures for the banking sector- a trend that could somewhat undermine the bank’s monetary tightening actions over the past year.
Fears of an economic slowdown spurred sharp losses in oil prices over the past week, which in turn saw a large portion of long positions being liquidated.
Signs of high crude supply also weighed on prices, as U.S. rose and as data showed Russian oil exports remained robust despite recent European sanctions and threats from Moscow to cut production.
Oil bulls are now looking to more price support from the Organization of Petroleum Exporting Countries and allies (OPEC+), with the cartel considering more production cuts during a meeting in early-April.
The group had last agreed to cut production by 2 million barrels a day in October 2022.
