Oil prices drop due to investor fears related to the fall of SVB bank
Concerns about a chain reaction after SVB's bankruptcy led to a sell-off in stocks
Oil prices moved lower alongside stocks on Monday as the collapse of Silicon Valley Bank (SVB) heightened fears of a new financial crisis. Meanwhile, recovering demand in China supported prices.
Source. Reuters
Futures for Brent crude oil fell by 1.2% to $81.79 per barrel, while WTI fell by 1.29% to $75.69 per barrel.
Concerns about a chain reaction after the bankruptcy of SVB led to a sell-off in US stocks on Friday; in addition, the US authorities closed the New York-based Signature Bank on Sunday.
The banking sub-index of the pan-European STOXX is losing more than 5.7%, despite the measures taken by the authorities the day before to maintain confidence in the banking system.
Market sentiment had been volatile before, as fears of further Fed monetary tightening intensified amid high US oil inventories, ANZ Bank analysts said in a note.
"It's like a confrontation between good activity growth in the East and data on macroeconomic malaise in the West," said Stephen Innes of SPI Asset Management.
At the end of last week, oil showed positive dynamics.
U.S. energy companies cut the number of oil and gas rigs for the fourth consecutive week, the first series since July 2020, oilfield services company Baker Hughes Co. said on Friday.
Background. As reported, due to the embargo, Russian oil imports to Germany fell by 99.9%.
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