Oil prices fell by more than two dollars today, Tuesday, to extend their losses for the second session in a row, as the collapse of the Silicon Valley bank shocked stock markets and raised fears of a new financial crisis.
Brent crude futures fell $1.64, or two percent, to $79.13 a barrel by 10:01 GMT. West Texas crude futures, the US mediator, fell $1.74, or 2.3 percent, to $73.06 a barrel.
Yesterday, Monday, Brent fell to its lowest level since early January, while West Texas Intermediate crude fell to its lowest level since December.
The decline in oil prices coincides with the continued decline in stock markets.
The sudden closure of the bank’s SVB financial group has raised concerns about the risks other banks face due to sharp waves of interest rate hikes approved by the US Federal Reserve over the past year. It also sparked speculation about whether the central bank would slow down the pace of monetary tightening.
Dealers no longer expect a 50 basis point rate hike next week. Estimates are now heading for a 25 basis point hike, even before today’s US consumer price data.
A lower interest rate could lead to a decline in the dollar, which in turn means higher oil prices.
A higher-than-expected rise in consumer price inflation in the US should put downward pressure on oil prices.
Meanwhile, consumer price inflation in China, the world’s largest oil importer, slowed in February to its lowest level in a year.
The American Petroleum Institute is expected to release US oil inventories data today.
Six analysts polled by Reuters expected an increase in US crude stocks by about 600,000 barrels in the week ending March 10.
