Oil prices fell and volatility rose as traders shied away from risk and tried to understand how the biggest US banking collapse since 2008 would reverberate through the economy.
Brent, the global benchmark, fell below $80 for the first time since early February as investors fled risk assets and into safer bets, but recovered some of those losses when the US authorities introduced emergency measures aimed at strengthening confidence in the banking system and preventing contagion.
The first-month 50-day implied volatility measure for West Texas Intermediate rose about 16 percentage points, the most since the start of Russia’s invasion of Ukraine in 2022. Traders are also closely watching the next move of the Federal Reserve after Goldman Sachs Group Inc. dismissed his call. for an interest rate hike by the Federal Reserve next week due to the turbulence.
“Energy traders did not expect the collapse of the 16th largest U.S. lender to trigger a wave of risk aversion that would send Brent crude below $80 a barrel,” said Ed Moya, senior analyst of Oanda market. “Oil’s rollercoaster won’t end anytime soon as Tuesday’s inflation report could reverse the recovery in Treasuries.”
Many market watchers are still optimistic about the long-term outlook. Saudi Aramco expects consumption to likely hit a record 102 million barrels a day by the end of 2023, while OPEC and its allies curb output and shale growth remains lackluster.
Prices:
- Brent for May delivery fell $2.01 to settle at $80.77 a barrel in New York
- April WTI fell $1.88 to settle at $74.80.
