Oil hovered around 15-month lows as a spread favored by hedge funds to trade fell with banking turmoil shaking confidence in markets.
Brent’s December-to-December spread narrowed to its weakest level since December 2021 on Monday, suggesting a longer-term impact of recent fears of a weakening demand outlook. Even crude’s most ardent touch, Goldman Sachs Group Inc., no longer expects the commodity to reach $100 a barrel this year.
The bank cut its Brent outlook for the next 12 months as growing concerns about a near-term recession and an exodus of investor flows sent crude prices sharply lower.
“Investor psyche has been damaged over the past week and it will take the emergence of market stability to bring investors back into the fold,” said Rebecca Babin, senior energy trader at CIBC Private Wealth. “Expect more volatility and trading with little conviction as we head into the Fed this week”
After being stuck in a narrow channel since late last year, oil prices fell last week as the banking crisis added to fears of a global recession and resistance to Russian crude flows. The fall in prices has raised the prospect of OPEC+ intervention, although there is speculation that the group will remain on the sidelines for now.
Prices:
- West Texas Intermediate for April delivery gained 90 cents to settle at $67.64 a barrel in New York.
- Brent for May settlement rose 82 cents to $73.79 a barrel.
(with the assistance of Julia Fanzeres)
