Bank Collapse Contagion Fears Spread To Oil Prices
Oil prices have fallen over $2 on Monday, and were down as much as $4 in early trading, as fears of a contagion spread following the sudden collapse of Silicon Valley bank on Friday.
By 10:20 a.m. EST on Monday, Brent crude had fallen 2.31% to $80.87, with WTI down 2.62% at $74.67.
The Dow was also plunged over 243 points early on Monday, clawing back some of those losses by 10:20 a.m., for a 70 point downswing.
Oil prices likely would have fallen even more had not Chinese demand data not provided a counterweight.
Fears of a pending financial crisis were sparked on Friday when the U.S. government seized the assets of Silicon Valley Bank (SVB)
SVB, the go-to lender for tech startups backed by venture capitalists, failed dramatically on Friday, with shares plunging 60% before the SEC halted trading. On Wednesday, the bank announced a massive capital raise, saying it would sell $2.25 billion in new shares to fix the balance sheet. That created a panic and a run on the bank, sending shares tanking by Friday, leading to an FDCI takeover.
On Sunday, Washington launched emergency measures to avoid the contagion spreading into a wider financial crisis. The Biden administration pledged that banks will bear the losses, not taxpayers.