Oil markets stabilise after Credit Suisse crisis sank prices to a15-month low
Oil markets have calmed down after sliding to 15-month lows yesterday, with tensions easing after Swiss regulators stepped in and offered Credit Suisse a £45bn emergency loan.
The financial woes of the troubled banking institution had seen prices tank across both major benchmarks, with WTI Crude falling below $70 per barrel for the first time since December 2021 while Brent Crude dropped over $6 per barrel during the day’s session.
The UK-based oil benchmark slipped from $78.28 per barrel to $72.09 per barrel yesterday, before recovering some ground and rising 0.9 per cent to $74.11 per barrel in this morning’s trading.
WTI Crude plummeted to $67.54 per barrel yesterday before ticking up to $68.02 per barrel today.
Nevertheless, both major benchmarks remain well below trading levels earlier this week, as Brent Crude has lost nearly 10 per cent since Friday’s close, while US crude is down about 11 per cent over the same period.
With investors fearing the growing stress on banks worldwide, market sentiment remains dictated by macrofactors – with Credit Suisse’s late rescue following the collapse of Silicon Valley Bank in the US.
However both OPEC and the IEA have posted bullish reports this week, expecting oil prices to rise amid tighter supplies later in the year.
The two rival organisations are optimistic Chinese demand could bolster the oil market over the year even if economic uncertainty weighs down oil consumption in the West.
“China’s reopening, following the lifting of the strict zero-COVID-19 policy, will add considerable momentum to global economic growth,” OPEC said in its report.
Overall, it expects Chinese oil demand to grow by 710,000 barrels per day (bpd) in 2023, up from last month’s forecast of 590,000, although its global total projections were steady due to downward revisions in Western markets.
Meanwhile, world oil demand in 2023 will rise by 2.32M barrels per day (bpd) – around 2.3 per cent.
The IEA was even more headstrong in its forecasts.
“Global oil demand growth started 2023 with a whimper but is projected to end the year with a bang,” the Paris-based agency said in its monthly oil review.
It argued rebounding jet fuel use and a resurgent China will see an overall first and fourth quarter ramp-up of 3.2m bpd, the largest relative in-year increase since 2010.