Oil futures remained under pressure Monday, failing to find support after logging their biggest weekly drop of 2023 as banking jitters stoked recession fears.
Price action
- West Texas Intermediate crude for April delivery
CL.1,
-0.72% CL00,
-0.69% CLJ23,
-0.72%
fell $1, or 1.5%, to $65.74 a barrel on the New York Mercantile Exchange, after falling 13% last week. - May Brent crude
BRN00,
-0.62% BRNK23,
-0.62% ,
the global benchmark, was down 97 cents, or 1.3%, at $72 a barrel on ICE Futures Europe. It fell 11.9% last week. - April gasoline
RBJ23,
+0.37%
dropped 0.8% to $2.481 a gallon, while April heating oil
HOJ23,
+0.75%
was up 2.6% at $2.399 a gallon. - April natural gas
NGJ23,
+2.05%
rose 2.1% to $2.387 per million British thermal units.
Market drivers
Both WTI and Brent ended Friday at their lowest levels since December 2021, with pressure tied to fears that pressure on banks will push the U.S. economy into recession.
Crude bounced in Asian trading hours after Swiss banking giant UBS Group
UBS,
UBSG,
acquired rival Credit Suisse
CS,
CSGN,
at a steep discount in a deal brokered by regulators aimed at preventing further contagion in the global banking sector. But gains failed to hold.
Read: Here’s why UBS’s deal to buy Credit Suisse matters to U.S. investors
Uncertainty surrounds this week’s Federal Reserve policy meeting.
“Volatility is likely to linger this week, with broader financial market concerns likely to remain at the forefront. In addition, we have the FOMC meeting this week, which adds further uncertainty to markets,” wrote commodity analysts at ING, in a Monday note, referring to the Fed’s policy-setting Federal Open Market Committee.
See: Fed to pause this week because of bank stress: Goldman Sachs
In a Saturday note, commodity analysts at Goldman Sachs said they no longer see WTI and Brent crude hitting $100 a barrel. They nudged down their 12-month forecast for Brent to $97 a barrel in the second half of 2024 and lowered their outlook for WTI to $94 a barrel for 12 months ahead.
“Our adjustment also reflects somewhat softer fundamentals, namely higher-than-expected near-term inventories, moderately lower demand, and modestly higher non-OPEC supply,” they wrote. “We, however, still believe that sharp rises in EM (emerging market ) demand will outweigh moderate declines in DM (developed market) demand, pivot the market back into deficits from June onward, and drive the recovery.”
Source: https://www.marketwatch.com/story/oil-prices-resume-fall-after-biggest-weekly-drop-of-2023-de4d8581?siteid=yhoof2&yptr=yahoo