© Reuters.
by Ambar Warrick
Investing.com – Oil prices held a tight range in Asian trade on Monday, hovering above a 15-month low as markets waited for the next boot drop in a potential banking crisis.
Concerns about rising geopolitical tensions have also kept investors wary of crude oil, after Russian President Vladimir Putin said he would deploy tactical nuclear weapons in Belarus, escalating tensions with NATO over Ukraine. The bloc criticized the Russian move.
And while oil prices have recovered from recent losses last week, they remain near 15-month lows as markets fear an economic slowdown could erode demand for crude this year.
It fell 0.2% to $74.44 a barrel, while it was down 0.1% to $69.16 a barrel by 22:05 ET (02:05 GMT). Both contracts rose between 2% and 4% last week.
But oil prices have fallen more than 13% so far this year, with much of the losses occurring in March as the collapse of several US and European banks heightened concerns about an economic slowdown this year.
ING analysts noted that speculators have cut short oil long positions sharply over the past two weeks, with the overall situation turning more neutral during the month of March.
“This leaves speculators with plenty of room to push the market higher. Despite this, it is clear that we will need to see a change in sentiment and a lessening of concern over recent developments in the banking sector.”
Focus remained on Deutsche Bank (ETR: ), Germany’s largest lender, as the next potential victim of the banking crisis after default swaps, the cost of insuring a bank against a possible credit crunch, jumped to a five-year high last week. . This saw traders dump Deutsche shares en masse.
However, in the US on Monday, though, analysts indicated this was more due to a lack of negative news than any positive developments.
A moderate rebound in the dollar also kept crude oil markets under pressure, after some Federal Reserve officials suggested the bank could still raise interest rates two more times. But the trajectory of US monetary policy remains uncertain, especially as regulators work to prevent further spillovers in the banking sector.
The focus this week is also on readings from China, which has recovered substantially this year after no-COVID measures were lifted. However, the moderate trade and industrial data prompted the markets to reassess the extent to which oil demand has increased this year.