On Wednesday, the price of crude oil dropped to its lowest level in 15 months due to a combination of weak data from China and concerned that the global economy may suffer in the coming months due to symptoms of financial stress.

As data revealed that China’s industrial output increased by a less-than-expected 2.4% from a year earlier in the first two months of the year, below expectations, WTI Crude futures dropped to an overnight low of $70.03 per barrel. That is a weak start to what is anticipated to be a great year for a sector that has recently contributed significantly to the rise in global crude oil consumption. At 8:30 ET, they had recovered to $70.28, down 1.5% for the day. The price of Brent was $76.25, down 1.6%.

Following three bank collapses in the United States this week, prices took a further hit as new indications of instability in international institutions emerged. Shares of Credit Suisse (SIX:CSGN) fell to a new record low following news that Saudi National Bank (TADAWUL:1180), which had been trying to help the troubled Swiss institution, had decided not to do so any longer due to regulatory restrictions on the amount of money it could invest there.

The great recession of 2008–2009, which saw crude oil prices drop from a peak of $148 per barrel to a low of $32 in just five months, was heralded by the financial sector’s fragility.

To top it all off, the International Energy Agency announced that due to slowing demand and a gradual rise in non-OPEC supply, Russia’s invasion of Ukraine a year ago had been somewhat mitigated, with world stocks reaching their highest levels in 18 months. The IEA stated that it expects this, together with slower growth in advanced nations, to soften a dramatic tightening of the global spot market later in the year when Chinese demand picks up a notch.

The American Petroleum Institute reported that oil stocks increased by 1.1 million barrels last week, indicating that stockpiles are still rising in the United States. As usual, the deadline for the government’s statistics is 10:30 ET (14:30 GMT). The Energy Information Administration also stated on Tuesday that it anticipates shale oil output in the United States to reach its highest level since 2019 in April, while the increases in U.S. output are growing smaller, indicating that the expansion in U.S. supply is almost at its peak.

The IEA mirrored Tuesday’s OPEC predictions. OPEC reduced its predictions for OECD demand by the same amount while increasing its forecast for Chinese demand growth to 710,000 b/d from 590,000 b/d.