Mar 20, 2023
Oil near 15-month lows, key gauge sinks as banking jolt spreads
We’ve been bouncing between $78-$88 per barrel for the price of Brent all year so far: Rory Johnston
Oil hovered around 15-month lows as a favored spread for hedge funds to trade plunged with banking turmoil shaking confidence across markets.
Brent’s December-December spread narrowed on Monday to its weakest level since Dec. 2021, suggesting a longer-term impact from recent fears of a diminished demand outlook. Even crude’s most ardent bull, Goldman Sachs Group Inc., no longer forecasts the commodity to reach US$100 a barrel this year.
The bank lowered its Brent projection for the 12 months ahead as rising near-term recession concerns and an exodus of investor flows sharply lowered crude prices.
“Investor psyche has been damaged over the past week and it is going to take the emergence of a market stability to draw investors back to the fold,” said Rebecca Babin, senior energy trader at CIBC Private Wealth. “Expect more volatility and low- conviction trading as we head into the Fed this week”
After being stuck in a narrow channel since the end of last year, oil prices broke lower last week as the banking crisis magnified global recession fears and the resilience in Russian crude flows. The price slump has raised the prospect of intervention from OPEC+, though there’s speculation the group will stay on the sidelines for now.
- West Texas Intermediate for April delivery gained 90 cents to settle at US$67.64 a barrel in New York.
- Brent for May settlement edged up 82 cents to US$73.79 a barrel.