HOUSTON: Oil rose on Tuesday, extending a recovery from a 15-month low hit the previous day, as the rescue of Credit Suisse allayed concerns of a banking crisis that would hurt economic growth and cut fuel demand.
A raft of measure to stabilise the banking sector, including a UBS takeover of Credit Suisse and pledges from major central banks to boost liquidity, have helped calm investors after uncertainty about the financial system roiled markets last week.
“Fears of a banking crisis and a recession have eased, brightening the oil demand outlook at least for now,” said Fiona Cincotta, Senior Financial Markets Analyst at City Index. Brent crude was up 50 cents, or 0.7%, at $73.29 a barrel by 12:40 p.m. ET (16:40 GMT). US West Texas Intermediate (WTI) gained 84 cents, or 1.2%, to $68.48. “A ‘risk back on’ sentiment seems to be coming back to crude, as the latest selloff may very well have been exaggerated liquidation,” said Dennis Kissler, senior vice president of trading at BOK Financial. The Federal Reserve started its monetary policy meeting that on Tuesday. Markets expect a rate hike of 25 basis points, down from previous expectations of a 50 bps increase. Some top central bank watchers have said the Fed could pause further rate hikes or delay releasing new economic projections.