Oil Rises as US Banking Crisis Eased
Oil prices edged higher on Monday as concerns about the US banking system eased after US government officials pledged to take the necessary steps while the Russian president’s latest remarks on nuclear weapons raised supply-side concerns.
International benchmark Brent crude traded at $75.35 per barrel on Monday, a translation to a 1.01% increase from the closing price of $74.59 a barrel in the previous trading session.
At the same time, American benchmark West Texas Intermediate (WTI) traded at $70.06 per barrel, representing a 1.15% uptick after the previous session closed at $69.26 a barrel. Oil prices have been on the decline amidst uncertainties in the global economy.
Pressure in the market has been fueled further by the recent banking crisis in the United States following Fed’s hawkish pose.
St. Louis Fed President James Bullard stated on Friday that US regulators were prepared to take additional action in response to the sudden failure of multiple banks in the US, reducing the possibility of a crisis spillover effect.
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However, as long as high inflation rates are still on the table with unfolding interest rate hikes in major economies, fears of a global economic recession that would weaken oil demand continue to put downward pressure on oil prices.
Meanwhile, price upticks were also supported after Putin announced on Saturday that Russia will complete the construction of a special storage facility for tactical nuclear weapons in neighbouring Belarus, sparking concern and condemnation from Ukraine and its Western allies.
However, Daniel Hynes, commodity strategist at Australia and New Zealand Banking Group, said in an email that he was cautious of a full economic rebound in China.
‘The market is still waiting for a rebound in economic activity in China,’ he said, adding that ‘while travel has picked up sharply, consumer spending has remained subdued.’ #Oil Rises as US Banking Crisis Eased#