Oil Prices Begin To Bounce Back Following Dramatic Drop
Crude oil prices were on the rise Thursday after booking substantial losses earlier in the week following two bank collapses in the United States that ignited fears of an industry meltdown.
The rebound in early Thursday trade followed an update on China’s growth outlook from Goldman Sachs, which reinforced expectations of stronger oil demand this year.
The update follows more upbeat forecasts for demand, from OPEC and the International Energy Agency, which went as far as to say it expected global oil demand to hit a record high this year, at 102 million barrels daily.
OPEC, for its part, said oil demand this year will rise by 2.32 million barrels daily with China accounting for a large portion of it. Yet the oil-producing group noted rising interest rates as cause for concern with regard to global economic growth.
“China’s reopening, following the lifting of the strict zero-COVID-19 policy, will add considerable momentum to global economic growth,” OPEC said in its latest Monthly Oil Market Report.
“The rapid rises in interest rates and global debt levels could cause significant negative spill-over effects, and may negatively impact the global growth dynamic.”
The latest news that provided some support to prices was the news that the Swiss central bank will lend up to $54 billion to troubled Credit Suisse to prop up its liquidity. The possibility of a bank collapse of such proportions would have been devastating for the industry and for oil prices.
Yet the price recovery has been shaky amid heightened uncertainty about the world’s banking sector.
“Market sentiment deteriorated as the banking crisis expanded to Europe from the U.S. The future trend will depend on the level of market angst even if fundamentals are not necessarily showing much in the way of bearish signs,” one analyst from Haitong Futures told Reuters earlier today.