Oil prices collapsed after news from market sources said that Saudi Arabia does not consider the meeting between OPEC and non-OPEC oil producers in Algiers next week to be an appropriate time to take a decision on output levels.
Brent crude plunged more than 3% to $46.10 per barrel while U.S benchmark crude WTI dropped over 3.5% to trade at $44.63 per barrel.
Adding to the downward pressure in the crude market, the Federal Reserve has drafted a proposal on Friday to make it more difficult for banks to be involved in dealing in various physical commodity markets such as oil, natural gas, power generation and other non financial activities.
Banks and financial companies that plan to to continue being involved in the said commodities would have to hold up to $4bn in extra capital based on current activity levels of some of the biggest such players like Goldman Sachs and Morgan Stanley.
The rule has been proposed to lessen the legal, financial and reputational risks faced by financial institutions dealing in non-core markets such as physical commodity markets. It also comes against the background of years of growing criticism over banks and financial institutions entering and possibly manipulating commodity markets such as power generation or oil refining.
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