Investors are focused on the potential crash of several US banks, while tight crude oil supply/demand balance could change rapidly and lead to a rise or a decrease of price
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Markets start the week in a panic as bank collapses impacts sentiment
A combination of 'risk appetite' sentiments fueled by hope around a 'helpful Fed' and banking sector problems put downward pressure on the US dollar over the weekend. Following the bankruptcy of three US banks Silvergate, Signature, Silicon Valley Bank (now we know that,First Republic Bank also joined) the Federal Reserve, the Treasury Secretary and the National Economic Council reached an agreement with banking regulators to ensure that clients would be able to withdraw their funds. As mentioned, another US bank may be facing collapse - First Republic Bank. This bank is trading 60% lower in the US premarket session and has significantly impacted moods on the markets following the European cash session open with the German Dax down over 3,25% from daily highs. Furthermore, this situation has also significantly impacted expectations for the upcoming Fed decision with many now expecting a 25bp hike when it seemed almost certain for some that the US central bank would raise rates by 50 bp previously. In any case, markets remain very reactive and susceptible to further developments and could continue to be volatile throughout the week as a major domino effect could cause widespread risk-off moods leading to further losses for stocks and riskier assets.
Read next: Strong US labor market and a less hawkish Fed are playing in favour of crude oil price| FXMAG.COM
Oil prices pull back at the start of an uncertain week
Oil prices started the week with a significant downward move as both Brent and WTI are down over 2% as they approach their monthly lows while prospects of demand remain uncertain and as Russia continues to export its oil to several oil producing countries, further increasing supply on the markets. Furthermore, recent data from China shows that imports in January-February were 10.4 million barrels per day, 1 million bpd lower than November-December which may indicate that the country is still utilizing previously accumulated stocks. While investors remain focused on the potential collapse of several US banks, the situation on the oil market also continues to be very uncertain as the tight supply/demand balance could shift rapidly and lead to a potential rebound of prices or a continuation of the downward move which could see prices reach the lowest levels since the 23rd of February.
