NEW YORK – Oil prices nosedived on Tuesday, as US bank failures and still hot inflation readings raised concerns about recession risks.
The West Texas Intermediate (WTI) for April delivery shed US$3.47, or 4.64 per cent, to settle at US$71.33 a barrel on the New York Mercantile Exchange.
Brent crude for May delivery lost US$3.32, or 4.11 per cent, to close at US$77.45 a barrel on the London ICE Futures Exchange, reported Xinhua.
Both the WTI and Brent saw the lowest close for a front-month contract since Dec 9, according to Dow Jones Market Data.
On Monday, the US crude benchmark dipped 2.45 per cent, while Brent slid 2.43 per cent.
The oil weakness came as traders were worried that US regional banks’ problems may have a negative impact on demand for oil.
“The oil market is acting like a recession is inevitable or at the very least, we are seeing serious deleveraging of oil contracts,” Phil Flynn, senior analyst at The PRICE Futures Group, said in a note on Tuesday.
“The Silicon Valley Bank (SVB) bank failure and fears of contagion are still raging even as stocks find some stability,” he said.
Also weighing on the oil market was a key US inflation report. The US consumer price index (CPI) rose 0.4 per cent in February, putting the annual rate at 6 per cent, the Labor Department reported on Tuesday.
The readings were in line with market expectations. The core CPI, which excludes food and energy, rose 0.5 per cent in February, above the 0.4 per cent consensus, for an annual increase of 5.5 per cent.
The report continued to show persistent inflation, likely to keep the Fed on track for another interest rate hike next week despite current banking scares, experts noted. Traders also looked ahead to data on US fuel inventories as the US Energy Information Administration will release its weekly petroleum status report on Wednesday.
Analysts surveyed by The Wall Street Journal expect the publication to show a climb of 100,000 barrels in US crude-oil stockpiles for the week ending March 10. – Bernama
