Oil prices lose more than 3% at Friday’s open

Oil fell sharply on Friday as shares of European banks plunged and after US Energy Secretary Jennifer Granholm said that replenishing the Strategic Petroleum Reserve (SPR) could take several years, slowing down demand prospects.

The crude Brent lost $2.503.3%, at $73.41 a barrel, and West Texas Intermediate futures in the United States (WTI) fell $2.47up 3.5%, at $67.49.

Both benchmarks, which fell around 1% on Thursday, were on track to end the week slightly higher, after posting their biggest weekly declines in months last week on banking sector turmoil and recession concerns.

Bank stocks were declining in Europe, with Deutsche Bank and UBS Group hard hit by concerns that the sector’s worst woes since the 2008 financial crisis have yet to be contained.

The strength of the dollar, which was up 0.6% against a basket of six major currencies, also boosted selling. A stronger greenback makes crude more expensive for holders of other currencies.

“The SPR’s failure to buy crude is a major blow to the oil demand outlook,” said Stephen Brennock, an analyst at PVM Oil. “If anything, it will put even more pressure on China to do the hard work on the demand side in the coming months.”

The White House said in October that it would buy oil for the SPR again when prices were at or below about $67-72 a barrel. Granholm told lawmakers it would be difficult to use this year’s low prices to increase stocks, which are currently at their lowest level since 1983, following sales ordered by President Joe Biden last year.

Strong Chinese demand expectations limited declines, as Goldman Sachs said demand for raw materials is rising in China, the world’s biggest oil importer, with crude demand topping 16 million barrels a day.