Oil prices drop as banking concerns continue
Prices on oil decline on Monday morning due to fears that problems in the banking sector will contribute to a global recession. Stocks and interest rates are affected by the turmoil as well, reports news agency Reuters.
Monday morning, a barrel of US West Texas Intermediate trades at USD 64.92, against USD 66.61 on Friday afternoon.
Meanwhile, a barrel of European reference oil Brent trades at USD 70.99, compared to USD 72.80 on Friday.
The decline in oil prices arrives even though Switzerland’s largest bank, UBS, has taken over Credit Suisse. In relation to the acquisition, several central banks, headed by the US Federal Reserve and the European Central Bank (ECB), have promised to improve the market liquidity and assist other banks in order to prevent cases similar to Credit Suisse.
”The upcoming OPEC meeting is another potential catalyst on the outlook for the market. Further downside risk to prices increases the probability OPEC reduces production further to support prices,” states Baden Moore, National Australia Bank’s head of commodity research, to Reuters.
At a meeting on March 22, the US Federal Reserve is expected to increase the interest rate by 25 basis points as a response to the banking sector turmoil of recent weeks, writes Reuters.
Several executives have urged the central bank to hold back from increasing the interest rate, as it may have a negative impact on the dollar, thereby reducing the value of oil in the trade with other currencies.
Elsewhere in the commodities market, a troy ounce of gold goes for USD USD 1,994.30 on Monday morning compared to USD 1,959.50 on Friday afternoon.
English edit: Kristoffer Grønbæk
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