NEW YORK: Oil prices bounced up on Monday in volatile trade after diving to their lowest levels in 15 months as the market worried that risks in the global banking sector could spark a recession that would sap fuel demand.
Brent crude futures for May edged higher 3 cents to $73.00 a barrel by 1:20 p.m. EDT (1720 GMT). US West Texas Intermediate crude futures for April were down 4 cents at $66.70 on the eve of the contract's expiry. The more actively traded May futures were up 6 cents at $66.99 a barrel.
Oil prices rebounded as Wall Street posted gains. Earlier, Brent and WTI fell about $3 a barrel to the lowest since December 2021, with WTI sinking below $65 a barrel at one point. Last week, both benchmarks shed more than 10% as the banking crisis deepened.
The early slide in oil occurred despite an historic deal in which UBS, Switzerland's largest bank, agreed to buy Credit Suisse in an attempt to rescue the country's second-biggest bank.
After the deal was announced, the US Federal Reserve, European Central Bank and other major central banks pledged to enhance market liquidity and support other banks.
"There's a lot of fear-based movement (in oil prices)," Price Futures Group analyst Phil Flynn said. "We're not moving at all on supply and demand fundamentals, we're just moving on the banking concerns."
The S&P 500 and the Dow Jones gained, helping lift oil prices off session lows on bets the Fed will probably pause on rate hikes on Wednesday to ensure bank sector troubles do not snowball. Traders and economists remain split on whether the Fed will raise its benchmark policy rate.
Some executives are calling on the central bank to pause its monetary policy tightening but be ready to resume raising rates later.
"Volatility is likely to linger this week, with broader financial market concerns likely to remain at the forefront," ING Bank analysts said in a note, adding the looming Fed decision adds to uncertainty in markets.
Further out, a ministerial committee of OPEC and producer allies including Russia, together known as OPEC+, is set for a meeting April 3. The group agreed in October to cut oil production targets by 2 million barrels per day until the end of 2023.