Oil prices fell sharply on March 24 amid declining European banking shares and after U.S. Energy Secretary Jennifer Granholm said refilling the country's Strategic Petroleum Reserve (SPR) may take several years, dampening demand prospects.
Brent crude fell $2.50, or 3.3%, to $73.41/bbl by 1031 GMT, while West Texas Intermediate U.S. crude futures dived $2.47, 3.5%, to $67.49/bbl.
Both benchmarks, which fell about 1% on March 23, were on track to end the week slightly higher, after posting their biggest weekly declines in months last week due to banking sector turmoil and worries about a possible recession.
Banking stocks slid in Europe with Deutsche Bank and UBS Group hit hard by worries that the worst problems in the sector since the 2008 financial crisis have not yet been contained.
A stronger dollar, which rose 0.6% against other currencies on March 24, also fueled the sell-off. A stronger greenback makes crude more expensive to holders of other currencies.
"The lack of crude buying for the SPR represents a major blow to the oil demand outlook," PVM Oil analyst Stephen Brennock said.
"If anything, it will heap even more pressure on China to do the heavy lifting on the demand side over the coming months," he added..
The White House said in October it would buy back oil for the SPR when prices were at or below about $67/bbl-$72/bbl.
Granholm told lawmakers that it would be difficult to take advantage of low prices this year to add to stockpiles, which are currently at their lowest level since 1983 following sales directed by President Joe Biden last year.
Strong demand expectations from China capped decreases, with Goldman Sachs saying commodities demand was surging in China, the world's biggest oil importer, with oil demand topping 16 million barrels per day (MMbbl/d).
Meanwhile, Russian Deputy Prime Minister Alexander Novak said a previously announced cut of 500,000 bbl/d in Russia's oil production would be from an output level of 10.2 MMbbl/d in February, the RIA Novosti news agency reported.
That would mean Russia is aiming to produce 9.7 MMbbl/d between March and June, according to Novak, which would be a much smaller output cut than Moscow previously indicated.
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