Oil steadied at the week’s open as the world’s most powerful economies took aggressive steps to contain the worst global banking crisis since 2008, bolstering the allure of risk assets including commodities.
(Bloomberg) — Oil steadied at the week’s open as the world’s most powerful economies took aggressive steps to contain the worst global banking crisis since 2008, bolstering the allure of risk assets including commodities.
Global benchmark Brent held above $73 a barrel after plunging 12% last week to hit the lowest since December 2021. At the weekend, Swiss authorities brokered a takeover of Credit Suisse Group AG by rival UBS Group AG. In addition, the Federal Reserve and five other central banks announced coordinated action to boost liquidity in US dollar swap arrangements.
There are also signs that demand in top oil importer China remains robust, with Unipec — the trading arm of Sinopec — buying 2 million barrels of the North Sea’s Johan Sverdrup crude, the first purchase to Asia in three months. Official data showed China’s oil imports rose 12% in February from last year.
After trading in a tight range at the start of 2023, crude has broken lower as the banking crisis, concerns over a global slowdown, and Russia’s ability to keep crude flowing despite a web of sanctions combined to undermine prices. The slump has raised the prospect of intervention from OPEC+, though some observers reckon that the group will stay on the sidelides for now.
Last week’s sharp drop led one of the oil market’s most ardent bulls, Goldman Sachs Group Inc., to temper its optimism. The Wall Street giant no longer sees oil reaching $100 a barrel this year as recession fears bite.
The historic takeover of Credit Suisse followed client outflows and a massive rout in its stock and bonds. The lender’s troubles, which came after the collapse of smaller US lenders, triggered turmoil across financial markets last week, including in raw materials as investors shunned risk.
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