© Bloomberg. A tanker truck drives past a Phillips 66 refinery in Borger, Texas, U.S., on Saturday, Sept. 26, 2020. After all the trauma the U.S. oil industry has been through this year — from production cuts to mass layoffs and a string of bankruptcies — many producers say they’re still prioritizing output over reducing debt.
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(Bloomberg) — Oil held losses as mounting investor concerns about a global banking crisis eroded appetite for risk assets, including commodities.
West Texas Intermediate sank below $65 a barrel to the lowest since 2021 before paring some of the decline. That followed a 13% slide last week as troubles at Credit Suisse (SIX:) Group AG triggered turmoil across financial markets.
After a weekend of frantic talks, Swiss authorities orchestrated a rescue of the bank by UBS Group AG (SIX:). Meanwhile, the Federal Reserve and five other central banks announced coordinated action to boost liquidity in US dollar swaps.
After trading in a tight range at the start of the year, crude has broken lower amid the banking turmoil, global recession fears and resilience in Russian crude flows. The price slump has raised the prospect of intervention from OPEC+, though there’s speculation the group will stay on the sidelines for now.
“This has no longer anything to do with supply and demand,” said Ole Sloth Hansen, head of commodity strategy at Saxo Bank A/S. “It is purely driven by worries and short sellers can ride that wave until the general level of risk appetite shows signs of stabilizing.”
Last week’s sharp drop led one of the oil market’s most ardent bulls, Goldman Sachs Group Inc (NYSE:)., to temper its optimism. The Wall Street titan no longer sees oil reaching $100 a barrel this year as recession fears bite.
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