By Adedapo Adesanya
Oil prices rebounded and rose by over 1 per cent on Monday, even as the market worried that risks in the global banking sector could spark a recession that would weaken fuel demand.
Brent crude futures rose 82 cents or 1.1 per cent to $73.79 a barrel, while the United States West Texas Intermediate (WTI) crude futures gained 90 cents or 1.4 per cent to sell at $67.49 per barrel.
Earlier in the session, prices had dived to their lowest levels in 15 months amid the banking sector turmoil of the past week with the latest from Credit Suisse, which, despite a takeover by UBS, didn’t offer much hope.
During the weekend, UBS said it plans to buy troubled Credit Suisse for $3 billion in an attempt to stop the contagion from spreading to the global banking system.
“The combination is expected to create a business with more than USD 5 trillion in total invested assets and sustainable value opportunities,” UBS said on Sunday.
Amid the market turmoil, investors and speculators fled riskier assets such as crude oil futures.
After the deal was announced, the US Federal Reserve, European Central Bank, and other major central banks pledged to enhance market liquidity and support other banks.
Analysts noted that due to this development, the market’s direction is being impacted by something more than demand and supply.
The markets are also on edge about the US Fed Reserve’s next meeting, which is on Tuesday and Wednesday, and analysts expect the high volatility in all markets – including the oil market – to continue at least this week.
Meanwhile, the Group of Seven Nations (G7) is not likely to revise a $60-per-barrel price cap on Russian oil this week, according to Reuters on Monday.
The G7 was due in mid-March to revise the price cap put in place in December, but the officials said EU countries’ ambassadors were told by the European Commission over the weekend there is no appetite among the G7 for an imminent review.
A ministerial committee of the Organisation of the Petroleum Exporting Countries (OPEC) and producer allies, including Russia, together known as OPEC+, is set for a meeting on April 3.
The 23-member group agreed in October to cut oil production targets by 2 million barrels per day until the end of 2023.
Modupe Gbadeyanka