Newfound Optimism In Banking System Causes Oil To Jump Over 5%
Meanwhile, Turkey contributes to gradual global tightness: File Image/Pixabay
In a spectacular display of rapidly shifting sentiment, crude traders on Monday expressed newfound confidence in the U.S. banking system and caused oil prices to rise over 5 percent.
After First Citizens BancShares Inc. said it will acquire deposits and loans of failed Silicon Valley Bank, West Texas Intermediate settled up $3.55, or 5.1 percent higher, at $72.81; Brent settled up $3.13, or 4.2 percent, at $78.12 per barrel.
This came on the heels of reports that U.S. authorities were in early deliberations about expanding emergency lending facilities.
John Kilduff, founding partner, Again Capital
It's production that we really can't afford to lose
Oil was also supported substantially by Turkey halting an estimated 450,000 barrels per day (bpd) crude output from Kurdistan following an arbitration decision that confirmed Baghdad's consent was needed to ship the commodity.
John Kilduff, founding partner at Again Capital, said the loss of supply would amplify any other future force majeure or production outages: "Now we have this new wrinkle here.... It's production that we really can't afford to lose."
Oil may possibly extend its gains into the week on news that Russian president Vladimir Putin plans to station tactical nuclear weapons in Belarus; additionally, China National Petroleum Corp on Monday said China's crude oil imports are expected to rise 6.2 percent in 2023 from last year's level to 540 million tonnes.
This was contrasted by Russia's Deputy Prime Minister, Alexander Novak, indicating that the former Soviet Union is close to achieving its target of cutting crude output by 500,000 bpd.
But Russia's seaborne crude flows are holding strong, suggesting that the country's output cut has yet to feed through into supplies to the international marketplace.
According to tanker tracking by Bloomberg, Russia's shipments slid by 123,000 bpd to 3.11 million bpd in the seven days to March 24; the less-volatile four-week average dipped by a similar amount.
This is the sixth straight week the shipments held above 3 million bpd.