- Due to the Credit Suisse disaster, WTI reaches lows around $66 in December 2022, which changes the financial landscape globally.
- Oil prices decline as investor optimism for the growth prospects in 2023 wanes.
- Russian oil shipments have decreased, according to the IEA, and the world’s oil reserves have grown.
Prices for West Texas Intermediate (WTI) fell to levels last seen in December 2022, with the $66 level serving as the bottom for the three-day steep slide. On Thursday, a backup plan was introduced in response to Credit Suisse’s deteriorating financial situation, providing momentary reprieve. After Silicon Valley Bank’s (SVB) controversy, Credit Suisse was the next to deal with its problematic liquidity issue, which sent its shares sharply down.
Due to abrupt changes in the state of the world economy, mostly caused by record high borrowing rates, the price of WTI fell early this week. Falling oil prices are a given as investors’ bullish economic estimate for 2023 wanes.
Investors are selling off risky assets like oil and equities markets and flocking to buy bonds in a risk-averse atmosphere as the prospect for global growth dims.
According to remarks published on Wednesday by the International Energy Agency (IEA), Russian oil shipments decreased by more than 500k bpd in February. The increase in the global oil inventory to 7.8 billion barrels, the biggest level since September 2021, suggests that oil demand is slowing. The IEA increased its global oil demand prediction for 2023 from 100 million bpd to 102 Mbpd despite a gloomy prognosis for world growth.
WTI prices are anticipated to be influenced by risk sentiment in the medium- to short-term, with the downside bias continuing.