March 14 Crude oil prices fell more than $1 on Tuesday, extending the previous day's slide, as the collapse of Silicon Valley Bank rattled equities markets and sparked fear about a fresh financial crisis.
Brent crude futures were down 87 cents, or 1.1%, at $79.90 a barrel at 0345 GMT. US West Texas Intermediate crude futures (WTI) dropped 85 cents, or 1.1%, to $73.93 a barrel. On Monday, Brent fell to its lowest since early January, while WTI dropped to its lowest since December.
The sudden shutdown of SVB Financial triggered concerns about risks to other banks resulting from the US Federal Reserve's sharp interest rate hikes over the last year. It also spurred speculation on whether the central bank might slow the pace of its monetary tightening.
US authorities launched emergency measures on Sunday to shore up confidence in the banking system after fears of contagion from the failure of Silicon Valley Bank led to a sell-off in US assets at the end of last week and state regulators closed New York-based Signature Bank on Sunday.
Beyond the Silicon Valley Bank shockwaves, oil prices were also under pressure due to signs of a weaker-than-expected economic recovery in China, despite the lifting of its strict COVID-19 restrictions, said Leon Li, an analyst at CMC Markets.
"The market had previously expected a strong recovery of the Chinese economy, but the latest February inflation rate was only 1% year-on-year, reflecting the current deflationary state of the Chinese economy and weak demand," he said.
China's statistics bureau released data last week showing consumer inflation in the world's second largest economy slowed to the lowest rate in a year in February as shoppers remained cautious even after pandemic curbs were lifted in late 2022.
In US supply news, the American Petroleum Institute is expected to release industry data on US oil inventories on Tuesday.
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.