Crude oil relief rally as banking concerns ease

On Monday, the price of crude oil increased in early trading as concerns over turmoil in the banking sector eased, while comments by Russian President Vladimir Putin over the weekend heightened geopolitical tensions in Europe.

  • WTI pares the first intraday gains in three amid downbeat RSI (14).
  • Receding bearish bias of MACD probes Oil sellers around the key supports.
  • Buyers need validation from 11-week-old horizontal resistance to retake control.

Brent crude futures rose by 0.4%, or 33 cents, to $75.32 a barrel at 0040 GMT, while US West Texas Intermediate crude climbed to $69.65 a barrel, up 0.6%, or 39 cents. Brent rose by 2.8% last week, and WTI rebounded 3.8% as anxiety in the banking sector eased. The rise in oil prices was seen more as a relief rally and part of a correction following a 16% fall in the preceding two weeks, according to MI analyst Pia Chauhan.

Crude oil prices were also supported after Russian President Vladimir Putin announced that he will station tactical nuclear weapons in Belarus, escalating geopolitical tensions in Europe over Ukraine. NATO criticised Putin on Sunday for what it called his “dangerous and irresponsible” nuclear rhetoric.

On Friday, Russia’s Deputy Prime Minister Alexander Novak said that Moscow was close to achieving its target of reducing crude output by 500,000 barrels per day (bpd) to about 9.5 million bpd. Despite lowering output, Russia is expected to maintain crude oil exports by reducing refinery output in April, according to data from industry sources and Reuters calculations.

Exports of Russian oil products have been more affected than crude exports by a recent European Union embargo, with tonnes of diesel stuck on ships awaiting buyers. Industrial action in France is also disrupting refineries, reducing crude demand and fuel production. Investors are watching for China’s manufacturing and services PMIs to be released later this week, as the data could be supportive for oil if it indicates further recovery in the country’s economic activity from COVID disruptions, according to CMC Markets analyst Tina Teng.

In the US, according to a report on Friday by energy services firm Baker Hughes Co, oil rigs rose by four to 593 last week, up for the first time in six weeks, while gas rigs remained steady at 162.

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