© Reuters. FILE PHOTO: A view shows the bulk carrier Yan Dun Jiao 1 at the Vostochny container port on the coast of Nakhodka Bay, near the port city of Nakhodka, Russia, August 12, 2022. REUTERS/Tatiana Meel
By Arathy Somasekhar
HOUSTON (Reuters) – Oil prices rose more than 2% on Tuesday, extending a decline from a 15-month low hit the day before, as the Credit Suisse bailout allayed concerns a banking crisis would hurt growth. economical and would reduce the demand for fuel. .
Measures to stabilize the banking sector, including the acquisition of Credit Suisse by UBS and pledges by major central banks to increase liquidity, have calmed fears about the financial system that rocked markets last week.
“Fears of a banking crisis and recession have eased, improving the outlook for oil demand at least for now,” said Fiona Cincotta, a senior financial markets analyst at City Index.
closed $1.53, or 2.1%, at $75.32 a barrel, while US West Texas Intermediate (WTI) closed up $1.69, or 2.5%, at $69.33.
On Monday, both benchmarks finished around 1% higher after falling to their lowest level since December 2021, with WTI dipping below $65 at one point. Last week, they lost more than 10% as the banking crisis deepened.
“A ‘risk on’ sentiment appears to be returning to crude as the last sell-off may well have been an exaggerated sell-off,” said Dennis Kissler, senior vice president of trading at BOK Financial.
The US Federal Reserve kicked off its monetary policy meeting on Tuesday. Markets are expecting a 25 basis point rate hike, below previous expectations for a 50bp increase. Some leading central bank watchers have said the Fed could halt further rate hikes or delay the release of new economic forecasts.
Wall Street indices also closed sharply higher on Tuesday as fears about liquidity in the banking sector eased and market participants looked to the Fed.
Meanwhile, {{8849|US crude oil inventories rose by about 3.3 million barrels last week, according to market sources citing figures from the American Petroleum Institute. That compares with Reuters estimates of a draw of 1.6 million barrels.
Figures from the US Energy Information Agency will be released on Wednesday.
A meeting of OPEC+ ministers, which includes members of the Organization of the Petroleum Exporting Countries plus Russia and other allies, is scheduled for April 3. OPEC+ sources told Reuters the price decline reflects bank fears rather than supply and demand.
Hedge fund manager Pierre Andurand agreed that the latest price decline was speculative and not based on fundamentals. He predicted that oil will hit $140 a barrel by the end of the year.
The chief executive of energy trader Gunvor, Torbjorn Tornqvist, said he expected oil prices to rise towards the end of the year as rising Chinese demand further tightened the market.
Money managers reduced their net long positions in US crude oil futures and options in the week to March 14, the US Commodity Futures Trading Commission (CFTC) said.
(This story has been corrected to set the closing price for Brent crude at $75.32 a barrel, not $69.33, in paragraph 4)