The selloff in oil continues on Monday, with Brent falling to the $72 a barrel mark and U.S. crude down to the $65 per barrel handle, as traders are cutting long positions amid the banking sector turmoil of the past week.
The market rout saw Credit Suisse’s stock plummet by 60% on Monday in Europe after the announced takeover by UBS.
As of 8:26 a.m. ET on Monday, the U.S. oil benchmark WTI Crude was down by 1.15% at $65.95, and Brent Crude, the international benchmark, was falling by 1.08% at $72.09.
During the weekend, UBS said it plans to buy troubled Credit Suisse for $3 billion in an attempt to stop the contagion of spreading to the global banking system.
“The combination is expected to create a business with more than USD 5 trillion in total invested assets and sustainable value opportunities,” UBS said on Sunday.
On Monday, shares in UBS were down by 5% in Europe, while Credit Suisse’s stock collapsed by 60%.
Amid the market turmoil, investors and speculators are fleeing riskier assets such as crude oil futures.
European stocks in general rebounded on Monday, although bank stocks hit the lowest level in three months. The Dow Jones Industrial Average futures wavered on Monday ahead of the U.S. markets opening as traders try to assess the risks of more contagion to the banking system.
The markets are also on edge about the Fed’s next meeting, which is on Tuesday and Wednesday, and analysts expect the high volatility in all markets – including the oil market – to continue, at least this week.
Brent Crude trades lower, below $75 per barrel, with short sellers in control, Ole Hansen, Head of Commodity Strategy at Saxo Bank, said on Monday.
“This is no longer a supply/demand focused market and additional risk off could see it target $65,” Hansen added.