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Brent, WTI hit lowest in 15 months
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Uncertainty reigns as Fed considers interest rate hike
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U.S. Fed begins two-day meeting on Tuesday
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G7 to hold off revising Russian oil price cap - EU
officials
(Updates with settlement prices, adds market activity)
By Stephanie Kelly
NEW YORK, March 20 (Reuters) - Oil prices rebounded and
rose over 1% on Monday after diving to their lowest levels in 15
months as the market worried that risks in the global banking
sector could spark a recession that would sap fuel demand.
In volatile trade, Brent crude futures for May rose
82 cents, or 1.1% to $73.79 a barrel. U.S. West Texas
Intermediate crude futures for April gained 90 cents, or
1.4%, at $67.64 on the eve of the contract's expiry. The more
actively traded May futures rose 89 cents, or 1.3%, at $67.82 a
barrel.
Oil prices rebounded as Wall Street posted gains. Earlier,
Brent and WTI fell about $3 a barrel to the lowest since
December 2021, with WTI sinking below $65 a barrel at one point.
Last week, both benchmarks shed more than 10% as the banking
crisis deepened.
Oil's early slide occurred despite an historic deal in which
UBS, Switzerland's largest bank, agreed to buy Credit Suisse in an attempt to rescue the country's second-biggest
bank.
After the deal was announced, the U.S. Federal Reserve,
European Central Bank and other major central banks pledged to
enhance market liquidity and support other banks.
"There's a lot of fear-based movement (in oil prices),"
Price Futures Group analyst Phil Flynn said. "We're not moving
at all on supply and demand fundamentals, we're just moving on
the banking concerns."
The S&P 500 and the Dow Jones gained, helping lift oil
prices off session lows on bets the Fed will probably pause on
rate hikes on Wednesday to ensure bank sector troubles do not
snowball. Traders and economists remain split on whether
the Fed will raise its benchmark policy rate.
Some executives are calling on the central bank to pause its
monetary policy tightening but be ready to resume raising rates
later.
"Volatility is likely to linger this week, with broader
financial market concerns likely to remain at the forefront,"
ING Bank analysts said in a note, adding the looming Fed
decision adds to uncertainty in markets.
Meanwhile, Group of Seven Nations are not likely to revise a
$60-per-barrel price cap on Russian oil this week, two European
Union officials and one official from a coalition member told
Reuters on Monday.
The G7 was due in mid-March to revise the price cap put
in place in December, but the officials said EU countries'
ambassadors were told by the European Commission over the
weekend there is no appetite among the G7 for an imminent
review.
A ministerial committee of OPEC and producer allies including Russia, together known as OPEC+, is set for a meeting April 3. The group agreed in October to cut oil production targets by 2 million barrels per day until the end of 2023. (Reporting by Stephanie Kelly in New York; additional reporting by Noah Browning in London, Florence Tan and Emily Chow in Singapore; Editing by Paul Simao, Chris Reese and David Gregorio)
Messaging: stephanie.kelly.thomsonreuters.com@reuters.net))