Oil firms as investors fear banking crisis

Oil prices moved slightly today, Friday, after a meeting between Saudi Arabia and Russia that calmed the markets, but the two benchmarks are still heading to record a second weekly decline, after a banking crisis led to intensive selling in global financial markets this week.

By 0133 GMT, Brent crude futures were up two cents to $74.72 a barrel. On Thursday, it ended a three-day losing streak and recorded an increase of 1.4 percent upon settlement.

According to “Reuters”, US West Texas Intermediate crude fell by two years to $ 68.33 a barrel, after it recorded a 1.1 percent increase on Thursday at the 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 declined this week, while the collapse of Silicon Valley and Signature banks prompted the US and Swiss governments to seek to support bank liquidity.

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

“The sudden collapse of SVB Bank and Signature prompted a rethink of the health of the broader economy and spooked markets,” JP Morgan analysts said in a note.

Analysts added, “Oil demand is being reassessed, but we do not expect a significant change in fundamentals and tend to outpace the volatility of the financial sector, while keeping our price expectations unchanged for the time being while we await an update on potential policy actions in the coming weeks.” A reference to a meeting of the OPEC + group and Washington’s possible move to refill strategic reserves

OPEC+ Advisory Committee, which includes 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.