Oil markets recoup some losses on Credit Suisse news
News of a $54bn lifeline for the troubled Swiss lender offers support, but analysts say sentiment remains fragile
16 March 2023 - 13:59
byAhmad Ghaddar
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London — Oil prices clawed back some ground on Thursday after touching 15-month lows in the previous session as markets calmed somewhat after Credit Suisse was thrown a financial lifeline by Swiss regulators.
But market sentiment remained fragile amid lingering fears of growing stress on banks worldwide, and both the main crude benchmarks gave up some of Thursday’s early gains.
Brent crude futures were up 54c, or 0.7%, at $74.23 a barrel by 11.05am GMT. West Texas Intermediate (WTI) rose 43c, or 0.6%, to $68.04.
On Wednesday, the third straight day of declines, WTI fell below $70 a barrel for the first time since December 20, 2021. Brent has lost almost 10% since Friday’s close while WTI is down about 11%.
“Oil dropped below $70 a barrel amid fears of a second financial crisis hurting the demand outlook,” said City Index analyst Fiona Cincotta. “Today the market mood has improved after Credit Suisse was thrown a financial lifeline.”
Credit Suisse said on Thursday that it would borrow up to $54bn from the Swiss central bank to shore up its liquidity and investor confidence after a slump in its shares intensified fears about a global financial crisis.
Those fears could crowd out inflation worries when European Central Bank policymakers meet later on Thursday, possibly forcing them to ditch plans for a hefty interest rate hike that could slow economic growth and dent oil demand.
A fall in US fuel stocks last week also supported oil prices. While Energy Information Administration data showed that crude inventories rose by 1.6-million barrels, petroleum and distillates stocks fell by a combined 4.6-million barrels.
Opec’s rosier outlook for China oil demand was also supportive, said Lim Tai An, an analyst at Phillip Nova.
Opec raised its 2023 China demand forecast this week and a monthly report from the International Energy Agency (IEA) on Wednesday flagged an expected boost to oil demand from resumed air travel and China’s economic reopening after abandoning its zero-Covid policy.
Still, oversupply concerns remain. The IEA report said commercial oil stocks among developed countries in the Organisation for Economic Co-operation and Development have reached an 18-month high, while Russian oil output in February remained near levels registered before the war in Ukraine despite sanctions on its seaborne exports.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Oil markets recoup some losses on Credit Suisse news
News of a $54bn lifeline for the troubled Swiss lender offers support, but analysts say sentiment remains fragile
London — Oil prices clawed back some ground on Thursday after touching 15-month lows in the previous session as markets calmed somewhat after Credit Suisse was thrown a financial lifeline by Swiss regulators.
But market sentiment remained fragile amid lingering fears of growing stress on banks worldwide, and both the main crude benchmarks gave up some of Thursday’s early gains.
Brent crude futures were up 54c, or 0.7%, at $74.23 a barrel by 11.05am GMT. West Texas Intermediate (WTI) rose 43c, or 0.6%, to $68.04.
On Wednesday, the third straight day of declines, WTI fell below $70 a barrel for the first time since December 20, 2021. Brent has lost almost 10% since Friday’s close while WTI is down about 11%.
“Oil dropped below $70 a barrel amid fears of a second financial crisis hurting the demand outlook,” said City Index analyst Fiona Cincotta. “Today the market mood has improved after Credit Suisse was thrown a financial lifeline.”
Credit Suisse said on Thursday that it would borrow up to $54bn from the Swiss central bank to shore up its liquidity and investor confidence after a slump in its shares intensified fears about a global financial crisis.
Those fears could crowd out inflation worries when European Central Bank policymakers meet later on Thursday, possibly forcing them to ditch plans for a hefty interest rate hike that could slow economic growth and dent oil demand.
A fall in US fuel stocks last week also supported oil prices. While Energy Information Administration data showed that crude inventories rose by 1.6-million barrels, petroleum and distillates stocks fell by a combined 4.6-million barrels.
Opec’s rosier outlook for China oil demand was also supportive, said Lim Tai An, an analyst at Phillip Nova.
Opec raised its 2023 China demand forecast this week and a monthly report from the International Energy Agency (IEA) on Wednesday flagged an expected boost to oil demand from resumed air travel and China’s economic reopening after abandoning its zero-Covid policy.
Still, oversupply concerns remain. The IEA report said commercial oil stocks among developed countries in the Organisation for Economic Co-operation and Development have reached an 18-month high, while Russian oil output in February remained near levels registered before the war in Ukraine despite sanctions on its seaborne exports.
Reuters
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