The price of oil rebounded on Monday after suffering its worst weekly drop in months on reports that UBS had agreed to takeover Credit Suisse and as major central banks around the world moved to calm and stabilize financial markets.
By 9.40 AM Bangkok time, Brent crude futures gained 30 cents, or 0.41%, to US$73.27 per barrel, recouping some of last week’s over 12% loss, its largest weekly decrease since December.
US West Texas Intermediate crude was trading at US$66.93 per barrel, up 19 cents, or 0.28%, from the previous week’s low of 13%.
The largest bank in Switzerland, UBS, announced late Sunday that it will buy its banking rival Credit Suisse in a $3.2 billion takeover.
Following the announcement, the largest central banks around the world, including the Federal Reserve in the United States, the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, and the Swiss National Bank, all made commitments to increase market liquidity and lend assistance to other financial institutions.
Traders’ confidence in the market has been restored thanks to the Swiss bank agreement and central banks’ measures to inject liquidity into the markets, according to CMC Markets analyst Tina Teng, leading to a relief rally in risk assets, including the crude markets.
Financial markets are pricing in a 60% chance that the Fed will raise rates by 25 basis points on Wednesday, however some business leaders are urging the central bank to temporarily halt its monetary policy tightening.
