Oil prices fell on Tuesday, extending the previous day’s losses, as the failure of Silicon Valley Bank shook equity markets and fueled fears of a new financial crisis.
As of 10:32 AM (Bangkok time), the price of a barrel of Brent crude had dropped 98 cents, to $79.79. WTI futures in the United States fell 95 cents, to $73.85 a barrel. Brent hit its lowest point since early January on Monday, while WTI hit its lowest point since December.
SVB Financial’s unexpected closure, according to analysts, has raised concerns about the risks to other banks posed by the U.S. Federal Reserve’s fast interest rate hikes over the last year. It also led some to wonder if the Fed would be willing to ease the stringent monetary policy it has been enforcing.
Concerns about a domino effect from the failure of Silicon Valley Bank caused a sell-off in U.S. assets at the week’s end, and on Sunday, state regulators shut Signature Bank in New York. This prompted the U.S. government to take extraordinary measures to restore public trust in the banking system.
The American Petroleum Institute is slated to reveal industry figures on US oil inventories on Tuesday.
The average expectation of six analysts polled by Reuters was that crude stockpiles increased by approximately 600,000 barrels in the week ending March 10.
The U.S. government bonds marked the largest three-day decline since 1987, falling around 100 basis points since last Wednesday as rate hikes hope diminished after some financial banks in the U.S. collapsed.
The U.S. 1-year Treasury is moving around 4.4131%, gaining 2.82%. This could imply that the market is expecting the U.S. interest rate to come down at least 0.34 basis points, based on the current Fed fund rate at 4.75%.