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As banking worries grow, oil drops to its lowest level in over a year
As worries over Credit Suisse shook global markets and countered expectations of a recovery in Chinese oil demand, oil prices fell more than 6% to their lowest level in more than a year. Early indications of a return to calm and stability were short-lived after Credit Suisse’s biggest shareholder said it was unable to continue lending the Swiss bank money, sending its shares and other European equities down.
A barrel of Brent crude dropped $5.11, or 6.6%, to $72.34. West Texas Intermediate (WTI) crude for the United States fell $4.86, or 6.8%, to $66.48. Both benchmarks fell for three straight days and reached their lowest levels since December 2021.
“We definitely have seen the oil market separate themselves from oil inventories and we’re more focused on a larger meltdown of the global economy,” said Phil Flynn, an analyst at Price Futures Group.
Additionally, the value of the dollar increased relative to a basket of other currencies, increasing the cost of purchasing crude for those who hold those currencies. In the meantime, statistics showed that after the strict COVID-19 containment measures were lifted, China’s economic activity increased in the first two months of 2023.
Following the announcement of the agreement, the Federal Reserve of the United States, the European Central Bank, and other major central banks pledged to increase market liquidity and support other banks.
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