Oil prices were firm on Friday after a meeting between Saudi Arabia, and Russia cheered markets amid expectations of stronger Chinese demand. Still, it edged toward its biggest weekly decline since December as the banking crisis rattled global financial and oil markets.
Brent crude futures were up $1.12 at $75.78 a barrel, up 1.5% on Thursday.
U.S. West Texas Intermediate crude advanced $1.15 to $69.48 a barrel after closing 1.12% higher in the previous session.
Both contracts hit their smallest levels in more than a year this week and are on pace for their biggest weekly declines of around 10% since December.
Oil and other global assets retreated this week as the collapse of Silicon Valley Bank, Signature Bank, Credit Suisse, and First Republic Bank prompted the U.S. and Swiss governments to bail out.
Oil demand is picking up again, but there also appears to be little change in the fundamental outlook, and it tends to be overwhelmed by challenges in the financial sector.
OPEC+ will meet on April 3
A further price drop could force OPEC+ to cut supply to avoid a forecast inventory build in the second quarter, which will meet on April 3.
WTI fell below $69 a barrel for the first time since December 2021, which could prompt the U.S. government to build up its strategic oil reserves at record lows and boost demand.
Analysts’ expectations of a recovery in Chinese demand have supported recent price gains, with March U.S. crude oil exports to China the highest in nearly two-and-a-half years.
However, contagion risks between banks still hold back investors, curbing their appetite for assets such as commodities, as they fear further breakouts could trigger a global recession and dampen oil demand.
The recent banking turmoil may continue to increase the demand outlook. These inflation issues, central bank rate hikes, and confidence in financial systems will not go away quickly.
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