Oil regains some ground after falling to 2021 lows on banking sector fears

Oil prices rose in early Asian trade on Thursday, clawing back some ground from more than one-year lows hit in the previous session as markets calmed somewhat after Credit Suisse was thrown a financial lifeline by Swiss regulators.

Brent crude futures rose 85 cents, or 1.2 per cent, to $74.54 per barrel by 0107 GMT. West Texas Intermediate crude futures (WTI) rose 74 cents, or 1.1 per cent, to $68.35 a barrel.

Both benchmarks rose by more than $1 earlier in Thursday’s session.

On Wednesday, they hit their lowest levels since December 2021, having fallen for three straight days. Brent has lost nearly 10 per cent since Friday’s close, while U.S. crude is down about 11 per cent.

Later on Thursday, European Central Bank policymakers are seen leaning towards a half-percentage-point rate hike as the euro zone economy is picking up strength and inflation is set to remain high for years.

Higher interest rates can lead to depressed demand for oil as economic growth slows, but concerns of a deepening financial crisis for the banking sector could also weigh on oil demand.

Meanwhile, figures showed 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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