Oil retreated for a second session, tracking a slide in equity markets and feeling the effects of a stronger dollar.
(Bloomberg) — Oil retreated for a second session, tracking a slide in equity markets and feeling the effects of a stronger dollar.
West Texas Intermediate fell as much as 4.5%, eliminating most of its gains from earlier in the week. Equity markets weakened on Friday, led lower by a selloff in European banking stocks where there are fresh signs of stress. The dollar was up almost 1% against the euro, diminishing the global appeal of commodities that are priced in the US currency.
Crude remains on course for its steepest first-quarter drop since 2020, when the pandemic wiped out demand. A potential US recession, robust Russian oil flows in the face of Western sanctions, and strikes at refineries in France have all proved bearish forces.
“The banking crisis is spreading to real estate and that has the stock market back on the defensive, thereby once again reducing risk appetite,” said Ole Sloth Hansen, head of commodity strategy at Saxo Bank. “The dollar trades higher as US and especially European stocks drop hard,” driving down broader commodities.
Signs that the US Federal Reserve has reached the end of its tightening cycle gave wider markets — and oil — a lift earlier this week.
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