Oil extended its slide as turmoil in the banking sector continued to roil markets.
West Texas Intermediate futures plunged below US$68 a barrel and Brent dropped below US$75, both for the first time since December 2021. The retreat reflects wider financial concerns as well as a bearish report from the International Energy Agency that forecast global supply will “comfortably” exceed demand in the first half of the year. Adding further pressure is the prospect of an interest-rate hike from the Federal Reserve when it meets next week.
The latest weekly release from the Energy Information Administration reported slight crude builds that were mostly in line with expectations.
“Throw fundamentals out the window,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth. Sentiment is in the “driver’s seat.”
Prices:
- WTI for April delivery fell US$3.35 to US$67.98 a barrel at 11:14 a.m. in New York
- Brent for May settlement dropped US$3.40 to US$74.05 a barrel
Oil has endured a bumpy year, whipsawed by aggressive monetary tightening from the Fed and optimism around China’s demand recovery. Prices have finally breached their tight US$10 trading range, with the latest three-day slide the worst since November. The retreat sent the U.S. benchmark into oversold territory on its 14-day relative strength index.
December lows around US$65 dollars a barrel should provide support to oil markets, said Matt Maley, chief market strategist at Miller Tabak + Co.
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