Crude recovered some of its earlier losses along with benchmark
equity indexes after Swiss regulators pledged a liquidity lifeline to Credit
Suisse, which had earlier seen shares fall as much as 30%.
Both crude benchmarks hit their lowest levels since December
2021 and have fallen for three straight days.
Brent crude settled down $3.76, or 4.9% lower, at $73.69 a
barrel. U.S. West Texas Intermediate crude (WTI) closed down $3.72, or 5.2%
lower, at $67.61.
Hedge funds were liquidating because of rising interest
rates and economic uncertainty, said Dennis Kissler, senior vice president of
trading at BOK Financial, adding that heavy selling pressure on U.S. stock
markets on Wednesday was adding to the fund liquidation in crude.
Brent has fallen by more than 10% since Friday's close,
while U.S. crude is down more than 14%.
The U.S. dollar also strengthened against a basket of
currencies, making it more expensive for holders of those currencies to
purchase crude. [USD/]
Adding to the bearishness in the market, U.S. crude
stockpiles rose by 1.6 million barrels last week, government data showed, more
than the expected rise of 1.2 million barrels in a Reuters poll of analysts.
"The primary driver behind the price weakness is broad
concern for the global economy and risk-off sentiment in the market,"
Stacey Morris, head of energy research at data analytics company VettaFi.
Meanwhile, figures showed that China's economic activity
picked up in the first two months of 2023 after the end of strict COVID-19
containment measures.
Wednesday's monthly report from the International Energy
Agency flagged an expected boost to oil demand from China, a day after OPEC
increased its Chinese demand forecast for 2023.
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