Oil ended Wednesday at its lowest closing price level since December, affected by turbulence in the banking sector in the United States and Europe.
The barrel of West Texas Intermediate (WTI) oil, a benchmark for the United States, collapsed 5.21% to 67.61 dollars for the contract with delivery in April, after falling as much as 65.65 dollars during the session, a floor in more than 15 months.
Since Friday, WTI lost almost 12%.
Meanwhile, in London, the barrel of Brent from the North Sea for delivery in May lost 4.80% to 73.69 dollars.
After a pause on Tuesday, fears about the situation in the banking sector returned to the markets.
The bad winds came from Credit Suisse, which fell hard on the stock market and was the target of doubts about its financial soundness. "It is a bank that counts and the risk of contagion (to the rest of the sector) will not dissipate soon"Oanda’s Edward Moya said in a note.
"Commodities are often a signal that heralds recession concerns"remarked Matt Smith of Kpler. "We are increasingly fearful about the economy and, consequently, oil falls"he added.
investors see "direct parallels with previous recessions caused by the banking sector, in particular the financial crisis of 2008"when the oil "Collapsed"explains Stephen Innes, SPI AM.
During periods of strong instability, "investors tend to withdraw from risky assets like oil and invest in safer sectors"prioritizing safe-haven securities, remarked Giovanni Staunovo, from UBS.
For Phil Flynn of Price Futures Group, "crude takes the worst part because many banks are exposed to oil, with financing (to that industry) and also because many have trading activity (purchase and sale)" oil in the markets.
The analyst explained that the slight recovery at the end of the day occurred after reports that the Swiss government was in talks with Credit Suisse to try to find a way out of the crisis.
This Wednesday, in addition, the weekly report of the US Energy Information Agency (EIA) reported an increase of 1.6 million barrels in commercial crude oil reserves in the United States.
This is the tenth rise in 11 weeks, news that is putting downward pressure on prices.
Fears that difficulties in the banking sector could cause a global economic recession plunged oil prices to their lowest level since December 2021 on Wednesday.
By 1655 GMT, a barrel of US WTI crude oil for April delivery was down 7.47% at $65.93.
The barrel of Brent, a reference in Europe, for delivery in May sank 7.36%, to 71.75 dollars.