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Oil prices recovered some ground on Thursday after falling to 15-month lows in the previous session, as markets calmed somewhat after Swiss regulators threw Credit Suisse a financial lifeline.
But hit by fears that the crisis will deepen for banks around the world, market sentiment remained fragile and both benchmarks gave up some early Thursday gains as Brent rose more than a dollar. As of 0427 GMT, Brent crude futures were up 58 cents, or 0.8%, at $74.27 a barrel.
West Texas Intermediate (WTI) crude futures rose 51 cents, or 0.8%, to $68.12 a barrel.
On Wednesday, the third straight day of declines, US crude fell below $70 a barrel for the first time since December 20, 2021. Brent has lost nearly 10% since Friday’s close, while US crude down 11%.
Credit Suisse said on Thursday it would borrow up to $54 billion from the Swiss central bank to bolster its liquidity and investor confidence after a plunge in its shares intensified fears of a global financial crisis.
“Market sentiment deteriorated as the banking crisis spread to Europe from the US. The future trend will depend on the level of market distress even if the fundamentals are not necessarily showing bearish signs,” Haitong Futures analysts said in a note to the customers
OPEC’s more optimistic outlook for oil demand in China also supported oil prices, said Lim Tai An, an analyst at Phillip Nova Pte.
OPEC raised its forecast for Chinese demand to 2023 earlier this week and a monthly report from the International Energy Agency (IEA) on Wednesday pointed to an expected boost to oil demand due to the resumption of air travel and China’s economic reopening after abandon its zero COVID policy. But concerns about oversupply remain.
Oil falls to nine-week low on inflation worries
The IEA said in the report that commercial oil stocks in developed OECD countries hit an 18-month high, while Russian oil output remained close to pre-war levels in February despite sanctions on its seaborne exports.
U.S. crude stockpiles also rose last week by 1.6 million barrels, beating analysts’ expectations for a 1.2 million barrel increase, the Energy Information Administration said on Wednesday.
Later on Thursday, European Central Bank policymakers are seen leaning toward a half-percentage-point rate hike as the eurozone economy recovers and inflation remains high for years.
Higher interest rates may lead to depressed demand for oil as economic growth slows, but concerns about an increased financial crisis for the banking sector may also weigh on oil demand.