Banking Fears Lead to Sell-Off in U.S. Assets
Fears of contagion from the failure of Silicon Valley Bank and the closure of New York-based Signature Bank by state regulators fueled a sell-off in U.S. assets, and Europe's STOXX bank index decreased by 5.7%. U.S. authorities launched emergency measures to stabilize confidence in the banking system.
Competing Sentiment Drivers in Crude Market
Market sentiment was already weak due to worries about monetary tightening by the Fed and high crude oil inventories in the U.S. Analysts from ANZ Bank noted, "It's like the battle of surging activity data in the East meets macro malaise in the West." A weaker dollar, which makes oil cheaper for holders of other currencies, has lent some support to prices.
Positive Momentum from U.S. Employment Data
Oil prices followed positive momentum from Friday's U.S. employment data, which beat expectations, with nonfarm payrolls rising by 311,000 jobs compared to the expected 205,000.
Long-term Supply Perspective
From a medium to long-term supply perspective, energy services firm Baker Hughes Co reported that U.S. energy firms cut the number of oil and natural gas rigs operating for a fourth consecutive week, a trend not seen since July 2020.