Oil Giants Shed 5-8% Amid Plunging Oil Prices

Hamilton Nwosa
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Oil Prices Set for Weekly Dip on Soft Demand Expectations

Crude oil prices were on course to end the week with a decline, as the latest prediction of softening demand growth reinforced bearish moods among traders. The prediction came from the International Energy Agency, which said in its latest monthly oil report that it expected oil demand this year to grow by 750,000 barrels daily,…

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After losing between 6-7% on Wednesday, oil prices are taking a toll on energy equities, with European giants shedding 6-8% and American oil companies down 5-7%.

As the markets attempt to digest two bank failures in the U.S., a plunge in shares of Credit Suisse and plummeting bank stocks on two continents, fears mount that a banking collapse could lead to a sustained economic downturn and cap demand for oil.

“It is hard to look past Credit Suisse and the obvious crisis of confidence,” Craig Erlam, senior market analyst at Oanda, told Reuters.

“We are no longer talking about a few regional U.S. banks. We are talking about a major European bank and the shock waves are reverberating through the entirety of financial markets today,” he said.

At 1.52 p.m. EST, Exxon (NYSE:XOM) was trading down 5.4%, with Chevron (NYSE:CVX) shedding nearly 5% and mid-caps such as Apache down 8.44%, followed by EOG Resources (-7%) and Occidental Petroleum (NYSE:OXY), down over 6%.

Across the Atlantic, equities plunged, with BP (NYSE:BP) down 7.6%, Shell (NYSE:SHEL) down over 7.3%, Italian Eni (NYSE:E) down over 6% and Spanish Repsol (OTCMKTS: REPYY) down over 7.7%. French TotalEnergies (NYSE:TTE) was down over 5.6%

The oil price collapse comes on the heels of the Energy Information Administration’s (EIA) inventory data released earlier on Wednesday, showing a build in crude oil inventories last week, with inventories now 7% higher than the five-year average.

The oil price rout also comes despite the International Energy Agency’s (IEA) predictions on Wednesday that the oil market would swing into a supply deficit in the second half of this year amid an economic rebound in China. Those predictions, however, are largely unchanged from last month’s report and failed to act as a counterweight to bank collapses.

At 2:05 p.m. EST on Wednesday, oil prices were recouping some losses, with Brent crude clawing its way back to $73.47 per barrel, down 5.14% on the day, and WTI down 5.64%, at $67.31 per barrel. NB: Tom Kool wrote this article for Oilprice.com

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