Fears Of A Recession Cause The Greatest Weekly Decrease In Oil Prices Since 2023.

As concerns over the U.S. and European banking sectors fuel recession fears, oil futures gave up early gains on Friday to end down. This represents the largest weekly decrease of 2023.

‍

Price movement

• On the New York Mercantile Exchange, West Texas Intermediate crude for April delivery CL.1, -2.98% CL00, -2.98% CLJ23, -2.98% dropped $1.61, or 2.4%, to end at $66.74 a barrel, giving the American benchmark a 13% weekly loss. According to Dow Jones Market Data, the U.S. benchmark posted its lowest finish since December 3 and experienced its largest weekly loss since June.
• The price of May Brent oil, the international standard, fell $1.73, or 2.3%, to trade at $72.97 per barrel on ICE Futures Europe, its worst close since December 20. Brent experienced its worst performance since the week that concluded on August 15 with an 11.9% weekly decline.
• Returning to Nymex, April gasoline RBJ23, -0.58% saw a 0.1% drop to $2.502 per gallon while April heating oil HOJ23, +1.28% saw a 1.3% increase to close at $2.679 per gallon.
• Natural gas for April NGJ23, -6.09% increased 7% to close at $2.338 per million BTUs.

‍

Market Forces

WTI and Brent both finished the week at 15-month lows, taking the brunt of a selloff in commodities that analysts attributed to recessionary concerns that were exacerbated by the failure of the Silicon Valley Bank in California and issues at the Swiss lender Credit Suisse.

‍

Oil prices have been notably affected by the downward trend within the present market turbulence, according to a report from Barbara Lambrecht, a commodity analyst at Commerzbank.

‍

On Thursday, the price of oil increased modestly after Credit Suisse announced that it had received a $54 billion lifeline from the Swiss National Bank and 11 U.S. banks did agree to deposit $30 billion with First Republic Bank FRC, -32.80%, the newest regional lender in the United States to come under investigation. The shares of Credit Suisse CS, -6.94% came under fresh pressure on Friday.

‍

Lambrecht stated, "We consider the price collapse as being excessive and largely speculatively driven.

‍

Prince Abdulaziz bin Salman, the Saudi Arabian country's energy minister, and Russian ’s deputy minister Alexander Novak met on Thursday. The recovery of Chinese oil demand following the lifting of COVID restrictions remains a "important crutch," according to Lambrecht, who also noted that crude is currently trading at a level that could lead the U.S. government to consider replenishing the Strategic Petroleum Reserve, which is at a 40-year low.

‍

According to us, this leaves enough (foreseeable) support for the price of oil without the need for an exceptional meeting of OPEC+, Lambrecht added. "While there is a lot of evidence to suggest that oil prices will start climbing again, market sentiment will likely be the primary factor deciding the path of oil prices in the near future,"