Oil rises 1% as investors reflect on the banking crisis

Oil prices rose nearly 1 percent on Friday after a meeting between Saudi Arabia and Russia calmed markets amid expectations of strong demand in China, after a banking crisis led to heavy selling in global financial and oil markets this week.

By 0400 GMT, Brent crude futures rose 81 cents to $75.51 a barrel. On Thursday, it ended a three-day losing streak and settled up 1.4 percent.

US West Texas Intermediate crude rose 78 cents to $69.13 a barrel, after recording a 1.1% rise on Thursday at close.

Both contracts hit their lowest levels in more than a year this week and are on track for their biggest weekly drop since December, at about 10 percent. Oil and other global assets fell this week, while the collapse of Silicon Valley and Signature banks prompted the US and Swiss governments to seek to support banks’ liquidity.

The OPEC+ advisory committee, which groups the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, meets on April 3.

Analysts at the National Australia Bank said in a note that further price falls may prompt OPEC + to cut supplies to prevent an expected increase in stocks in the second quarter of the year.

US West Texas Intermediate crude fell below $70 a barrel for the first time since December 2021, which could make prices attractive enough for the US government to start refilling the Strategic Petroleum Reserve, which has reached record low levels.

Analysts’ expectations about the recovery of demand in China supported the rise in oil prices at the end of the week, while US crude exports to China in March headed for their highest levels in nearly two and a half years.

Analyst Tina Ting of CMC Markets said that the recovery of demand in China will be positive for oil prices if the upcoming data show a good recovery in the country’s economy.

“China’s road traffic and air travel are growing strongly, while advanced economies are showing signs of improvement,” ANZ analysts said in a note to clients.

However, the risk of the spread of the crisis between banks continues to worry investors, which limits their appetite for assets such as commodities for fear that a new turmoil may lead to a global recession and a decline in demand for oil.