DTN Oil

WASHINGTON (DTN) -- West Texas Intermediate April futures traded on the New York Mercantile Exchange and Brent crude for May delivery on the Intercontinental Exchange eroded more than 3% on Friday. Futures were pressured by growing concerns the banking turmoil in the United States and the European Union would trigger a financial crisis in coming months, wiping out a large chunk of the post-pandemic gains in oil demand growth.

Financial and commodity markets took a beating this week as investors fled risky assets for the safety of the U.S. dollar, Treasury bonds and gold. The failure of Silicon Valley Bank and troubles at Credit Suisse Group AG compounded by fears of further rate increases by central banks triggered a three-day rout in the oil complex that sent crude prices to their lowest price point in 15 months. Oil futures briefly halted their decline on Thursday after the Swiss National Bank stepped in to rescue Credit Suisse and a consortium of large U.S. lenders came to the rescue of the troubled First Republic Bank on Thursday in a bailout plan supported by the U.S. government. On Friday morning, however, oil prices resumed losses once again.

Not even another decline in the number of active oil rigs in the United States which has now fallen to its lowest level in nine months helped oil complex climb into the green. Baker Hughes data released Friday afternoon showed the U.S. oil rig count continued lower for a fifth straight week, down one to 589 as of March 17, the lowest level since the week ended June 17, 2022, but 65 more than the same week in 2022.

On Friday, the WTI contract for April delivery eroded $1.61 for a $66.74-per-barrel (bbl) settlement, down more than $10 per bbl on the week, and the international crude benchmark Brent contract for May delivery declined to $72.97 per bbl, shedding $10.27 per bbl since last Friday's settlement. NYMEX RBOB April futures retreated $0.0020 to $2.5015 per gallon. Exception in the oil complex was front-month ULSD futures that firmed $0.0352 on Friday for a $2.6787-per-gallon settlement. Both RBOB and ULSD futures declined more than 0.15 cent from the prior week.

Elsewhere, the European Central Bank on Thursday delivered another 50-basis-point increase to its benchmark lending rate but refrained from signaling any further rate moves in coming months.

"The Governing Council is monitoring current market tensions closely and stands ready to respond as necessary to preserve price stability and financial stability in the euro area. The ECB's policy toolkit is fully equipped to provide liquidity support to the euro area financial system if needed and to preserve the smooth transmission of monetary policy," said the ECB in announcing the rate hike.

ECB President Christine Lagarde in a news conference following the rate decision stressed still high inflation across the euro area that is projected to "remain too high for too long," while emphasizing the bank's data-dependent approach to monetary policy.

Liubov Georges can be reached at liubov.georges@dtn.com