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U.S. Oil Closes Below $70 A Barrel For First Time Since 2021

Dow Jones2023-03-16

Trouble in the banking sector amplified fears that aggressive monetary tightening by the Federal Reserve and other central banks has set the stage for a sharp economic downturn.

Swiss banking giant Credit Suisse on Wednesday saw its shares fall to a record low, pressuring the European banking sector and financial markets days after two lenders collapsed in the U.S.

Oil failed to bounce alongside a modest rebound for equities on Monday, and extended losses as U.S. stocks fell sharply on renewed bank fears Tuesday, with the Dow Jones Industrial Average down 438 points, or 1.4%, and the S&P 500 down 1.2%.

"Oil is getting destroyed, with big macro looking straight into the U.S. recession vortex and energy traders drawing straight-line parallels to prior bank sector-driven recessions, especially the 2008 financial crisis, which has similar overtones to the current financial tumult and when oil tanked," said Stephen Innes, managing director of SPI Asset Management, in a note.

Innes said the lack of a "slingshot recovery" in China economic data following the country's lifting of strict COVID levels and mounting worries over Credit Suisse "has opened the trap door for the oil market today and could be the nail in the coffin for the oil market rebound in Q1."

The Energy Information Administration on Wednesday said U.S. crude inventories rose 1.6 million barrels last week. At 480.1 million barrels, U.S. crude oil inventories are about 7% above the five year average for this time of year, EIA said. Total motor gasoline inventories decreased by 2.1 million barrels, while distillate stocks declined 2.5 million barrels.

Analysts surveyed by The Wall Street Journal, on average, had looked for crude inventories to show a fall of 100,000 barrels, while gasoline stocks were seen down 1.2 million barrels and distillates down 600,000 barrels.

The American Petroleum Institute, an industry trade group, late Tuesday reported a 1.2 million barrel rise in U.S. crude inventories last week, according to a source citing the data, while gasoline inventories fell 4.6 million barrels and distillate stocks declined 2.9 million barrels.

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Comment4

  • HKhin
    ·2023-03-16
    Time to buy.
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  • kong1509
    ·2023-03-16
    Ok
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  • RoAd
    ·2023-03-16
    Oh
    Reply
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  • Bodoh
    ·2023-03-16
    Lower demand coming
    Reply
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