Oil Prices Mixed as Economic Growth Forecasts, US Banking System Concerns Weigh on Demand


(MENAFN) Oil prices showed mixed trends on Tuesday amid global economic growth forecasts and concerns about the US banking system. The international benchmark Brent crude traded at $77.65 per barrel, down 0.14% from the previous session's closing price of $77.76 a barrel. Meanwhile, American benchmark West Texas Intermediate (WTI) traded at $72.95 per barrel, up 0.19% from the closing price of $72.81 a barrel.

Investors remain focused on the ongoing financial crisis in the US and the Chinese economy's trajectory and oil demand outlook. The World Bank warned on Monday that global economic growth is expected to fall to its lowest level in three decades by the end of 2030, labeling the period from now until then as the "lost decade." The bank stated that almost all the economic forces that powered progress and prosperity over the last three decades were fading, leading to a decline in global potential GDP growth between 2022 and 2030. The World Bank cautioned that these declines would be much steeper if there were a global financial crisis or a recession.

Similarly, the International Monetary Fund's (IMF) Managing Director Kristalina Georgieva expressed her concerns about increasing financial stability risks while market uncertainties remain high. These factors weighed down on oil prices, as lower global growth forecasts suggest weaker demand for oil.

However, oil prices received some support after the US Federal Deposit Insurance Corporation announced that First Citizens Bank had agreed to buy the deposits and loans of the defunct Silicon Valley Bank (SVB) at a discount of $16.5 billion, approximately $72 billion of the failed bank's assets. This announcement allayed investor concerns about the US banking system and provided some bullish support for oil prices.

In summary, while economic growth forecasts and concerns about the US banking system continue to weigh on demand and keep oil prices mixed, the buyout deal of SVB's assets is seen as a positive development for the US financial system and provides some support for oil prices.

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