Crude falls further on bank sector crisis: Update

Adds details of market reaction in paragraphs 1-3

Crude futures fell to new 15-month lows today, despite financial authorities in Europe, North America and Asia rolling out new measures designed to stem a banking crisis.

Brent and WTI crude futures each fell by more than 3pc in Asian trading, in line with a drop in equity markets, as a government-supported buyout for struggling Swiss bank Credit Suisse and co-ordinated moves by central banks failed to ease concerns about the health of global markets.

Front-month May Brent crude futures fell by 3.3pc or $2.41/bl to $70.56/bl at 3.15pm Singapore time (07:15 GMT), a new 15-month low. WTI crude futures fell by 3.3pc to as low as $64.51/bl.

Futures had initially risen earlier in the day, after Swiss bank UBS agreed on 19 March to buy its struggling compatriot Credit Suisse for 3bn Swiss francs ($3.3bn), in a deal backed by a government loan of up to SFr100bn.

Shares in Credit Suisse slumped last week after the company admitted weaknesses in its accounting practices. The bank has a major presence in oil derivatives markets and trade finance, and its struggles threaten spillover effects that could put further pressure on smaller trading firms.

The UBS-Credit Suisse deal was followed by an announcement on 20 March that six central banks would increase the frequency of their dollar swap arrangements.

The co-ordinated move by the US Federal Reserve, Bank of Canada, Bank of England, European Central Bank, Bank of Japan and the Swiss National Bank effectively pumps more dollars into global markets, in an attempt to ease the financial strains following the collapse of two US banks last week.

The banking crisis raises questions about oil price direction linked to pending interest rate decisions and their impact on currencies.

By Kevin Foster