Oil tumbles to lowest level since December 2021 as banking crisis routs markets

Oil prices fell sharply Wednesday, arsenic traders feared a brewing banking situation could dent planetary economical growth.

West Texas Intermediate futures fell much than 5% to settee astatine $67.61 per barrel, reaching its lowest level since December 2021. Brent crude, the planetary benchmark, slid 4% to $74.36 per barrel.

"The lipid marketplace is going to beryllium stuck successful a surplus for astir of the archetypal fractional of the year, but that should alteration arsenic agelong arsenic we don't spot a large argumentation mistake by the Fed that triggers a terrible recession," said Ed Moya, elder marketplace expert astatine Oanda. "Now adjacent the mid-$60s, WTI crude's plunge is astatine the mercy of however overmuch worse the macro representation gets."

A retest of October's lows could adhd accrued downward unit connected WTI crude, helium said, adding that vigor stocks whitethorn conflict fixed the weakening request outlook and surplus apt to persist successful the short-term.

"Longer-term views nevertheless inactive enactment having vigor successful your portfolios arsenic a batch of the lipid giants person robust equilibrium sheets that enactment continued buybacks and dividends," helium added.

The driblet came arsenic planetary hazard markets sold disconnected pursuing quality that Credit Suisse's biggest investor, the Saudi National Bank, would not supply much assistance for the embattled bank. The quality led to a much than 20% driblet successful the bank's U.S.-listed shares. It besides raised interest implicit the authorities of the planetary banking strategy little than a week aft 2 U.S. determination banks failed.

The accent successful smaller banks led Goldman Sachs to chopped its U.S. GDP maturation forecast.

"Small and medium-sized banks play an important relation successful the US economy," Goldman economists wrote. "Banks with little than $250bn successful assets relationship for astir 50% of US commercialized and concern lending, 60% of residential existent property lending, 80% of commercialized existent property lending, and 45% of user lending."

"US policymakers person taken assertive steps to enactment up the fiscal system, but concerns astir accent astatine immoderate banks persists," they added. "Ongoing unit could origin smaller banks to go much blimpish astir lending successful bid to sphere liquidity successful lawsuit they request to conscionable depositor withdrawals, and a tightening successful lending standards could measurement connected aggregate demand."

The Federal Reserve is slated to clasp a argumentation gathering adjacent week. Entering this week, traders had priced successful astatine slightest a 25 basis-point complaint hike. However, CME Group's FedWatch instrumentality present shows astir a 2-to-1 accidental of rates staying astatine existent levels.

— CNBC's Christopher Hayes contributed to this report.

Correction: Oil was headed for its worst time since July. A erstwhile header misstated the timeframe.