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Crude oil prices began yet another week with a loss despite strong signals that central banks are stepping in to help troubled lenders in the U.S. and Europe.
In Asian morning trade, Brent crude was trading at $72.27 per barrel, while West Texas Intermediate was changing hands for $66.06 per barrel, both down by more than a percentage point from Friday’s close.
The weak start of the new trading week comes after the worst week for oil since the start of the year, with prices sinking to the lowest in 15 months following the news of the demise of Silicon Valley Bank and Signature Bank in the United States, reports of runs on smaller banks, and liquidity problems at one of the biggest international lenders, Credit Suisse.
By the end of the week, central banks managed to calm the worst of the fear, it appears, and oil recouped some of its losses temporarily. The U.S. Treasury assured the public that their deposits are safe and UBS offered to acquire Credit Suisse for more than $3 billion with the eager blessing of the Swiss authorities, who were looking to reverse a sharp decline in the stability of the global banking system.
Meanwhile, central banks in the EU, the U.S, and elsewhere promised they will deal with the liquidity crisis that is apparently everywhere and avoid another 2008-style meltdown of the industry.
This has so far failed to prop up oil prices, however, suggesting the efforts to convince the public that all will be well are not exactly being successful.
"The market focus is on current banking sector volatility and the potential for further rate hikes by the Fed," the head of commodity research for National Bank of Australia told Reuters earlier today.
"The upcoming OPEC meeting is another potential catalyst on the outlook for the market. Further downside risk to prices increases the probability OPEC reduces production further to support prices," Baden Moore also said.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.