Oil prices stabilized in Asian trade on Monday as investors sought clues from the broader financial markets, while Russian President Vladimir Putin’s weekend remarks escalated geopolitical tensions in Europe.
Brent crude futures held steady at $74.99 per barrel at 0357 GMT after hitting a session high of $75.64. West Texas Intermediate crude (WTI) was up 3 cents at $69.29 after rising to $69.92 earlier in the session.
Brent rose 2.8% last week, while WTI rose 3.8% as tensions in the banking sector eased.
Oil markets are closely watching the sentiment in the financial market, oil fundamentals are at the border. Price action on Brent and WTI futures during European and US trading hours, with plenty of volatility during the day is expected.
It would not be right to wait for a fast and strong recovery until the banking crisis completely dissipates, it may take days if not weeks.
The dollar, which has been holding oil gains in check, strengthened on Monday as investors evaluated regulators’ moves to rein in tensions in the global banking system.
A stronger dollar makes dollar-denominated commodities more expensive for holders of other currencies and behaves to suppress oil demand.
Prices got some support from President Vladimir Putin’s announcement escalating geopolitical tensions in Europe over Ukraine that he would deploy tactical nuclear weapons in Belarus.
NATO on Sunday criticized Putin for his “dangerous and irresponsible” nuclear rhetoric.
Russian Deputy Prime Minister Alexander Novak said on Friday that Moscow is very close to its target of reducing crude oil production by 500,000 barrels per day to about 9.5 million.
Russia’s petroleum products exports have been more affected by the European Union embargo than its crude oil exports so far, and there are tons of diesel awaiting buyers on board. Russia is expected to resume crude oil exports in April by reducing its refinery output, data from industry sources showed on Friday.
Analysts said Russian crude inventories have increased since September last year, and the country will likely want to avoid further inventory increases during the refinery maintenance season from March to June.
According to one view, production cuts may need to be extended beyond June to reduce inventories in Russia.
Meanwhile, industrial protest actions in France are disrupting refineries, reducing crude oil demand and fuel production.
Investors also expect China’s manufacturing and services purchasing managers’ indexes (PMI) to be released this week.
Energy services company Baker Hughes Co said in a report Friday that oil rigs in the US rose four to 593 in the past week for the first time in six weeks, while gas rigs remained steady at 162.
