Oil prices fall $1 as SVB collapse spooks financial markets

Oil prices fell more than $1 on Tuesday, extending the previous day’s slide, as the collapse of Silicon Valley Bank rattled equities markets and sparked fear about a fresh financial crisis.

Brent crude futures were down 87 cents, or 1.1 percent, at $79.90 a barrel at 0345 GMT. U.S. West Texas Intermediate crude futures (WTI) dropped 85 cents, or 1.1 percent, to $73.93 a barrel. On Monday, Brent fell to its lowest since early January, while WTI dropped to its lowest since December.

The sudden shutdown of SVB Financial triggered concerns about risks to other banks resulting from the U.S. Federal Reserve’s sharp interest rate hikes over the last year. It also spurred speculation about whether the central bank could slow the pace of its monetary tightening.

U.S. authorities launched emergency measures on Sunday to shore up confidence in the banking system after fears of contagion from the failure of Silicon Valley Bank led to a sell-off in U.S. assets at the end of last week and state regulators closed New York-based Signature Bank on Sunday.

The dollar index, which measures the currency against six peers, rose on Tuesday after falling for three consecutive days – it hit a nearly one-month low on Monday. A weaker dollar makes oil cheaper for holders of other currencies and typically supports oil prices.

In U.S. supply news, the American Petroleum Institute is expected to release industry data on U.S. oil inventories on Tuesday.

Six analysts polled by Reuters estimated on average that crude inventories rose by about 600,000 barrels in the week to March 10.