Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Crude oil higher; Banking stability, Putin's threats boost market

Published 03/27/2023, 09:36 AM
Updated 03/27/2023, 09:47 AM

By Peter Nurse   

Investing.com -- Oil prices gained Monday, boosted by renewed confidence in the global banking sector while Russian President Vladimir Putin ramped up geopolitical tensions in Europe.

By 09:35 ET (13:35 GMT), U.S. crude futures traded 1.5% higher at $70.33 a barrel, while the Brent contract rose 1.4% to $75.62 a barrel. 

The crude market received a boost Monday from a degree of stability in the banking industry after First Citizens BancShares (NASDAQ:FCNCA) agreed to buy most of Silicon Valley’s loan book and securities as well as assume all of its deposits in the wake of SVB’s collapse earlier this month.

Reports about the U.S. authorities deliberating plans to expand emergency lending facilities also helped ease worries about the health of the banking industry.

The global oil trade might be worth close to $200 billion but is still completely reliant on the funding provided by banks. 

Oil prices also drew support from Putin's announcement of plans to station tactical nuclear weapons in neighboring Belarus, in a move designed to intimidate the West over its support for Ukraine.

NATO described his comments as "dangerous and irresponsible," and Ukraine called for a meeting of the U.N. Security Council in response.

That said, crude prices remain marginally above the 15-month lows seen last week with data from Bloomberg suggesting that Russia’s crude flows despite Deputy Prime Minister Alexander Novak saying Moscow is close to achieving its target of cutting crude output by 500,000 barrels per day.

Russia’s shipments slid by 123,000 barrels a day to 3.11 million barrels a day in the seven days to March 24, according to tanker tracking by Bloomberg, holding above 3M a day for the sixth straight week.

Additionally, China’s statistics office had said that industrial profits were down 23% on the year in the first two months of 2023, implying the economic recovery in the largest crude importer in the world from the country’s reopening was slowing.

Speculators cut their long positions in the ICE Brent contract significantly last week, according to the latest positioning data.

“The latest data show that most of the gross longs that we saw added over January and February have now been closed out,” analysts at ING said, in a note. “Given the more neutral spec positioning, this leaves speculators with quite a bit of room to push the market higher. Although, obviously for that, we will need to see a change in sentiment and an easing in concern over recent developments in the banking sector.”

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.