Oil prices dipped $4, along with stocks, on Monday as the failure of Silicon Valley Bank sparked worries of a new financial crisis, but a rebound in China’s demand gave support.
Brent oil futures were down $2.21, or 2.67%, at $80.24 per barrel, after falling $3.96 to $78.82 earlier. West Texas Intermediate oil futures (WTI) declined $2.35 a barrel, or 3.06%, to $74.33 a barrel.
Brent has dropped to its lowest level since early January, while WTI has reached depths not seen since early December.
Concerns of contagion from Silicon Valley Bank’s bankruptcy prompted a selloff in US assets at the end of last week, while state authorities shut down New York-based Signature Bank on Sunday.
The STOXX bank index in Europe was down 5.7% after being down 3.8% on Friday. Authorities in the United States took extraordinary steps on Sunday to restore trust in the financial sector.
The market mood was already weak, with concerns about more Fed tightening worsened by rising crude oil stockpiles in the United States, according to ANZ Bank analysts in a report issued Monday morning.
“It’s like a struggle between soaring activity statistics in the East and macro malaise in the West,” said Stephen Innes, managing partner of SPI Asset Management, of the dueling emotion drivers in the oil market.
Prices have recently been supported by a weakening dollar, which makes oil cheaper for holders of foreign currencies.
The price of oil went down after the US job market surprised to the upside on Friday.According to a Reuters poll, nonfarm payrolls increased by 311,000 in February, above estimates of 205,000 jobs gained.
Baker Hughes Inc., an energy services provider, said on Friday that U.S. energy companies lowered the number of oil and natural gas rigs working for the fourth week in a row for the first time since July 2020.