LONDON, March 13 (Reuters) – Oil prices fell along with stocks on Monday as the collapse of Silicon Valley Bank raised fears of a new financial crisis, but a rebound in Chinese demand provided support.
Brent crude futures fell $1.44, or 1.7%, to $81.34 a barrel. barrel at 1001 GMT. West Texas Intermediate crude futures (WTI) fell $1.40, or 1.8%, to $75.28 a barrel. barrel.
Fears of contagion from Silicon Valley Bank’s failure led to a sell-off in U.S. assets late last week, while state regulators shut down New York-based Signature Bank ( SBNY.O ) on Sunday.
Europe’s STOXX banking index (.SX7P) fell 5.7%, after falling 3.8% on Friday. The US authorities launched emergency measures on Sunday to strengthen confidence in the banking system.
Market sentiment was already fragile as worries about further monetary policy tightening by the Fed have been exacerbated by high crude oil inventories in the US, analysts at ANZ Bank said in a note on Monday morning.
“It’s like the battle with rising activity data in the East meets macro malaise in the West,” said Stephen Innes, managing partner of SPI Asset Management, commenting on the competing sentiment drivers in the crude oil market.
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In recent days, a weaker dollar, which makes oil cheaper for holders of other currencies, has provided some support to prices.
Oil’s drop at the start of the week follows positive momentum on Friday, when US employment numbers surprised to the upside. Data for February beat expectations, with nonfarm payrolls rising by 311,000 compared with expectations for 205,000 jobs added, according to a Reuters poll.
From a medium- to long-term supply perspective, energy services firm Baker Hughes Co ( BKR.O ) said on Friday that U.S. energy companies this week cut the number of oil and natural gas rigs operating for the fourth straight week, the first time since July 2020.
Additional reporting by Andrew Hayley; Editing by Kirsten Donovan
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