Oil prices were little altered on Friday following a meeting between Saudi Arabia and Russia that helped to calm the markets, but crude benchmarks were still on track to drop for a second consecutive week after this week’s sell-off in the global financial markets was started by a banking crisis.
By 0133 GMT, Brent crude prices had recovered from three days of losses to close 1.4% higher. Brent crude futures were up 2 cents to $74.72 a barrel.
US West Texas Intermediate crude was trading at $68.33 a barrel, down 2 cents from the previous session’s closing price increase of 1.1%.
This week, both contracts fell to their lowest levels in more than a year, and they are expected to experience their 10% largest weekly drops since December. Last week’s collapse of Silicon Valley Bank (SVB) and Signature Bank forced the U.S. and Swiss governments to scramble to shore up liquidity at banks, putting pressure on oil and other global assets.
Investors’ enthusiasm for assets like commodities is being curbed by contagion concerns among banks, as they worry that a deeper crash could lead to a worldwide recession and reduce demand for oil.
The abrupt demise of SVB and Signature Bank “forced a rethink about the soundness of the broader economy and frightened markets,” according to analysts at JPMorgan.
“Oil demand is being repriced, but we see no change in fundamentals and are inclined to ride out financial sector volatility,” the analysts wrote, making reference to an OPEC+ meeting and US possibly moving to start replenishing strategic reserves.
On April 3, the advisory council of the Organization of the Petroleum Exporting Countries (OPEC) and their allies, which includes Russia, will convene.
According to National Australia Bank analysts, further price declines may force OPEC+ to cut back on supplies in order to avoid a second quarter inventory buildup that is anticipated.
For the first time since December 2021, WTI went below $70 a barrel. This may have made pricing enticing enough for the US government to begin replenishing its Strategic Petroleum Reserve, which is now at record low levels.
