Join +750K new investors every month who copy stock picks from billionaire's portfoliosSign Up Free

Oil up again as banking crisis ebbs, potential U.S. inventory draw in focus

Published 03/21/2023, 03:22 PM
Updated 03/21/2023, 03:24 PM
© Reuters.

By Barani Krishnan -- Crude prices rose a second day in a row on Tuesday as the U.S. banking crisis ebbed, helping turn traders attention towards a potential weekly inventory drop in the world’s largest oil consumer.

New York-traded West Texas Intermediate, or WTI, crude settled up $1.69, or 2.5%, adding to Monday’s 1.4% gain. Just on Monday, WTI fell to as low as $64.38, marking a bottom not seen since December 2021. For the whole of last week, the U.S. crude benchmark fell almost $10 a barrel or 13%.

London-traded Brent crude settled up $1.53, or 2.1%, at $75.32 per barrel, adding to Monday’s rise of 1.1%. The global crude benchmark plumbed a 15-month low of $70.12 on Monday, after finishing last week down 13%.

Crude prices cratered last week on concerns that a U.S.-to-Europe banking crisis could spill over into the broader economy, denting activity and potentially damaging demand for oil. Fears of slowing demand have weighed heavily on oil markets this year, keeping prices largely depressed.

Fears over the liquidity crisis at banks, however, abated since midday Monday as Swiss investment bank UBS (NYSE:UBS) said it will buy beleaguered peer Credit Suisse (NYSE:CS) and JPMorgan (NYSE:JPM) appeared to make progress in the rescue of First Republic Bank (NYSE:FRC), after last week’s federal takeover of regional banks Silicon Valley and Signature. 

A technical rebound has also set into oil and could take WTI higher, back into the $70 territory it was perched at before last week’s tumble, said Sunil Kumar Dixit, chief technical strategist at

“Oil continues to trade with positive bias as prices test the intraday high of $69.50, slightly above the 5-Day EMA of $68.90,” Dixit said, referring to the Exponential Moving Average. “As long as prices sustain above $68.50, we expect some more up move towards $70.”

Market participants were also on the lookout for U.S. weekly oil inventory data, due after market settlement from API, or the American Petroleum Institute.

The API will release at approximately 16:30 ET (20:30 GMT) a snapshot of closing balances on U.S. crude, gasoline and distillates for the week ended March 17. The numbers serve as a precursor to official inventory data on the same due from the U.S. Energy Information Administration on Wednesday.

For last week, analysts tracked by expect the EIA to report a crude stockpile drop of 1.565 million barrels, versus the 1.55M barrel rise reported during the week to March 10.

On the gasoline inventory front, the consensus is for a drop of 1.677M barrels over the 2.061M barrel decline in the previous week. Automotive fuel gasoline is the No. 1 U.S. fuel product.

With distillate stockpiles, the expectation is for a drop of 1.5M barrels versus the prior week’s deficit of 2.537M. Distillates, which are refined into heating oil, diesel for trucks, buses, trains and ships and fuel for jets, have been the strongest component of the U.S. petroleum complex in terms of demand.

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.