When Silicon Valley Bank collapsed, equity markets shook and fears of a new financial crisis grew, causing oil prices to fall more than $2 a barrel on Tuesday.
Brent oil futures fell $0.85, or 1.05%, to $79.92. WTI futures declined $0.98, or 1.3%, to $73.83. On Monday, Brent and WTI hit their lowest levels since early January and December 1
Equities fell as oil prices fell.
“We consider Monday’s events surrounding regional U.S. banks as more noise than news for commodities markets, and they should not have any substantial medium- to long-term impact,” said UBS analyst Carsten Menke.
SVB Financial’s unexpected closure raised worries about threats to other banks from the U.S. Federal Reserve’s significant interest rate rises over the last year.
Markets forecast a 25 bps rate increase next week instead of a 50 bps increase. A lesser rate hike might weaken the currency and boost oil prices.
Tuesday’s CPI data showed February inflation climbed as expected. The monthly CPI rose 0.4%, raising the annual inflation rate to 6%.
China, the world’s largest oil importer, had its lowest consumer inflation rate in a year in February.
The IEA will release its monthly oil market report on Wednesday, following OPEC on Tuesday.Around 4:30 p.m. ET, the American Petroleum Institute will report oil inventories.
Six Reuters experts predicted a 600,000-barrel increase in petroleum stocks last week.