Oil prices move little amid banking sector uncertainty
2023.03.26 22:49
© Reuters.
By Ambar Warrick
Investing.com– Oil prices kept to a tight range in Asian trade on Monday, hovering just above a 15-month low as markets waited for the next shoe to drop in a potential banking crisis.
Concerns over increased geopolitical tensions also kept investors wary of crude, after Russian President Vladimir Putin said he will station tactical nuclear weapons in Belarus, escalating tensions with NATO over Ukraine. The bloc criticized Russia’s move.
While oil prices recovered a measure of recent losses last week, they were still close to 15-month lows as markets feared that an economic slowdown will erode crude demand this year.
fell 0.2% to $74.44 a barrel, while fell 0.1% to $69.16 a barrel by 22:05 ET (02:05 GMT). Both contracts rose between 2% and 4% last week.
But oil prices are down over 13% so far this year, with a bulk of losses coming in March as the collapse of several U.S. and European banks ratcheted up concerns over an economic slowdown this year.
ING analysts noted that speculators had cut long positions on oil sharply over the past two weeks, with overall positioning turning more neutral through March.
“This leaves speculators with quite a bit of room to push the market higher. Although, obviously for that, we will need to see a change in sentiment and an easing in concern over recent developments in the banking sector.”
Focus remained on Deutsche Bank (ETR:), Germany’s biggest lender, as the next potential casualty of the banking crisis after credit default swaps, which are the cost of insuring the bank against a potential credit crunch, surged to near five year highs last week. This saw traders dump Deutsche’s shares en masse.
Still, U.S. on Monday, although analysts noted that this was more so on a lack of more negative news than any positive developments.
A mild recovery in the dollar also kept crude markets under pressure, after some Fed officials suggested that the bank could still hike interest rates two more times. But the path of U.S. monetary policy remains uncertain, especially as regulators act to prevent more fallout in the banking sector.
Focus this week is also on readings from China, which recovered substantially this year after the lifting of zero-COVID measures. But middling trade and industrial data saw markets reassess just how much China will boost oil demand this year.
