Crude oil futures closed more than 2% lower on Monday (March 13) as fears over the US banking crisis grew, with the government ordering the closure of Silicon Valley Bank (SVB) and Signature Bank (SB).
- WTI crude futures were down $1.88, or 2.45%, at $74.8 a barrel.
- Brent crude futures fell $2.01, or 2.43%, to close at $80.77 a barrel.
Investors are concerned that the collapse of SVB and SB will destabilize the banking system and spread to regional banks in the US, such as First Republic Bank (FRB), despite the US Treasury’s assurances that depositors with SVB and SB will have full access to their deposits.
FRB shares closed down more than 60%, with analysts warning that the bank’s different lending policy may not shield it from the fallout of SVB and SB’s bankruptcies.
The oil market, however, found some support from expectations that oil demand will increase as China opens up the country and the weakening of the dollar. The dollar index against a basket of six major currencies was down 0.95% at 103.5985 overnight.
The Federal Reserve (Fed) also announced the establishment of a “Bank Term Funding Program” aimed at protecting financial institutions from the impact of SVB and SB bankruptcies.
The situation remains fluid, and investors will closely watch for any developments that may impact the oil market.
The Spot Market tis Open
Tuesday, March 14, 2023