Confidence Crisis in Banks Affects Trading
The current downturn is driven by a crisis of confidence in banks that provide liquidity for crude oil and other commodities trading. Concerns over persistent interest rate hikes by the Federal Reserve and potential US economic recession have also contributed to the slump.
WTI and Brent Experience Steep Declines
New York-traded West Texas Intermediate (WTI) and London-traded Brent saw declines of 13% and over 13% for the week, respectively. Technical signals indicate further potential weakness for WTI, but volatility may limit the downside.
Uncertain Catalysts for Oil Price Recovery
Given the current negative outlook for short-term crude demand, energy traders remain uncertain about potential catalysts for raising oil prices. Russian oil stockpiles reached their highest levels since April due to sanctions imposed on Moscow for invading Ukraine in February 2021.
US Banking Crisis Triggers Global Impact
The US banking crisis began with the rescue of Silicon Valley Bank and Signature Bank, followed by Silicon Valley Bank filing for bankruptcy protection. The crisis has also spread to Europe, as Credit Suisse sought assistance from Switzerland's central bank.
