Oil up as dollar weakens after US bank failures

LONDON: (Agencies) : Oil prices climbed on Monday over a weakening dollar after the sudden collapse of Silicon Valley Bank and Signature Bank, while further price declines were limited after the US Administration vowed “decisive efforts” to safeguard the US economy.

International benchmark Brent crude traded at $83.03 per barrel at 9.59 a.m. local time (0659GMT), up 0.30% from the closing price of $82.78 a barrel in the previous trading session.

At the same time, American benchmark West Texas Intermediate (WTI) traded at $76.91 per barrel, a 0.29% increase after the previous session closed at $76.68 a barrel.

The declining value of the US dollar aided higher oil prices by making trade more appealing for oil buyers using other currencies.

The US dollar index, which measures the greenback’s value against a basket of currencies, including the Japanese yen, British pound, Canadian dollar, Swedish krona, and Swiss franc, fell 0.58% to 103.54 after two major US banks, of Silicon Valley Bank and Signature Bank, collapsed, stranding billions in deposits.

SVB, the commercial bank headquartered in Santa Clara, was the largest bank in Silicon Valley, based on local deposits and it was among the biggest banks in the nation.

However, prices were supported after a joint statement by Treasury Secretary Janet Yellen, Federal Reserve Board Chair Jerome Powell and Federal Deposit Insurance Corporation (FDIC) Chairman Martin J. Gruenberg.

US economy leaders noted that they are taking decisive actions to protect the US economy, adding that “depositors will have access to all of their money starting Monday, March 13. No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer.”

Furthermore, prices saw some upward support after Saudi oil giant Aramco’s chief executive Amin Nasser on Sunday said he was “cautiously optimistic” for a balanced and tight market in short to medium term.
Nasser also pointed to rising demand for jet fuel after China’s re-opening from tight Coronavirus-related restrictions.

Nasser’s comments came after China’s announcement of a modest economic growth target earlier in March.

China, the world’s second-largest economy, reported an official economic growth target of around 5% for 2023, an increase from 3% last year and less than half the 8.1% rate from the previous year.