2023-05-03 10:07:13
By Le Figaro with AFP
Posted
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Oil prices fell again on Wednesday on fears of a global recession and the US banking sector, with WTI briefly slipping below $70 for the first time since the OPEC+ cuts. Around 09:10 GMT (11:10 a.m. in Paris), the barrel of West Texas Intermediate (WTI), for delivery in June, dropped 2.27%, to 70.03 dollars, shortly after having slipped below the 70 dollar mark, a first since end of March. Its European equivalent, a barrel of Brent from the North Sea for delivery in July, lost 2.08% to 73.75 dollars.
Since Friday’s close, Brent has lost around 7.5% and WTI has fallen more than 9%. “Concerns about the US banking sector have resurfaced following the second largest bank failure in the US since the 2008 crisis“, explains Stephen Brennock, analyst of PVM Energy. The authorities and players in the banking sector hoped that the takeover of First Republic by JPMorgan on Monday would sound, at least temporarily, the end of the turmoil in the world of finance, but regional banks remained under pressure on Wall Street.
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” READ ALSO – Oil: US WTI closes down more than 5%, banks and economy worry
A percentage hike by the Fed?
«Shares of regional banks took a hit amid contagion fears“, adds the analyst. “At the same time, another interest rate hike is on the horizon“recalls Stephen Brennock. The market is indeed expecting the US Federal Reserve (Fed) to increase by a quarter of a percentage point on Wednesday after its monetary policy meeting, to counter inflation. A stricter monetary policy could weigh on the world’s largest economy by increasing the cost of credit for households and businesses. What accentuate the risks of recession, and therefore of a drop in demand for oil.
«If there is one global asset that can be said to be particularly sensitive to recession fears, it is oil.says Jameel Ahmad, analyst at CompareBroker.io. Negative signals on China’s economic growth add to general apprehensions about the global economy, say analysts at Energi Danmark. The Purchasing Managers’ Activity Index (PMI) in China, a reflection of the health of the industrial world, contracted in April, according to official data released on Sunday.
The two world crude benchmarks have thus largely lost their gains linked to the voluntary production cuts of certain members of the Organization of the Petroleum Exporting Countries and their allies (OPEC+). These cuts, announced at the beginning of April, and effective from May until the end of 2023, had been interpreted by many analysts as a desire by the alliance to defend a barrel of Brent above 80 dollars.
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