Both Brent and WTI crude oil prices hit a fresh 15-month low of $71,70/b and $67,70/b during Wednesday’s trading session, or down 7%, on a broad selloff amid a turmoil around Credit Suisse before rebounding later the day as markets calmed after the bank secured a lifeline loan from the Swiss National Bank.
Risk-sensitive oil prices initially plunged 7% on early Wednesday to their lowest levels since December 2021, after shares of Credit Suisse plummeted to a new all-time low for the second consecutive day when its top investor Saudi National Bank ruled out further assistance, triggering a massive selloff across the board.
However, oil prices managed to bounce off intraday lows toward $75/b and $69/b respectively following the news that the lender secured a $54 billion covered loan facility and a short-term liquidity facility from the Swiss central bank.
The global crude benchmark Brent has lost nearly 10% since last Friday’s collapse of Silicon Valley Bank, while U.S.-based WTI crude is down about 11% following a widespread risk aversion sentiment.
Investors remained nervous about the prospect of further market turbulence and the banking sector outlook which may keep pressure on the growth-led crude oil prices in the short term.
Hence, the oversupply signals have also increased pressure on oil prices, after OPEC said in its monthly report released on Tuesday that it was pumping about 28.92 million barrels of crude a day, or about 300,000 a day more than it expects will be needed in the second quarter of the year, while the production from Russia continues to prove resilient to international sanctions.
Finally, higher interest rates depress demand for petroleum products as economic growth slows but concerns of a deepening financial crisis for the banking sector could also weigh on oil demand, despite the prospect of a recovery in Chinese fuel demand.