Oil rose nearly 1% on Friday after a banking crisis triggered a sell-off in global financial and oil markets this week and a meeting between Saudi Arabia and Russia calmed markets amid strong demand expectations in China.
Brent crude futures rose 81 cents to $75.51 a barrel at 04:00 GMT, closing three-day losses, up 1.4% on Thursday.
West Texas Intermediate (WTI) crude rose 78 cents to $69.13 a barrel after closing the previous session up 1.1%.
Both contracts hit their lowest level in more than a year this week and are poised to post their biggest weekly declines since December, at around 10%.
Oil and other global assets are forcing the US and Swiss governments to hold liquidity in banks following the collapse of Silicon Valley Bank (SVB) and Signature Bank.
The advisory committee of the Organization of the Petroleum Exporting Countries and its allies, including Russia, known as OPEC+, will meet on April 3.
Oil demand is being repriced as OPEC+’s meeting and Washington likely start to replenish strategic reserves, but fundamentals change little. While updates on possible policy actions are expected in the coming weeks, the volatility in the financial sector needs to be overcome without changing the forecasts for now.
In a note, analysts from National Australia Bank said further declines in prices could prompt OPEC+ to cut supply to avoid an anticipated second-quarter stockpile increase.
WTI has dropped below $70 a barrel for the first time since December 2021, making prices attractive enough to stimulate demand as the U.S. government begins to replenish its record-low Strategic Petroleum Reserve.
Analysts’ expectations for China’s demand recovery supported the price increase over the weekend as US crude oil exports to China hit the highest level in nearly two and a half years in March.
Road traffic and air travel have increased strongly in China, while advanced economies are showing signs of improvement.
However, contagious risks among banks still keep investors nervous, and appetite for assets like commodities is waning as fears further issues could trigger a global recession and reduce oil demand.
If problems with inflation, central bank rate hikes, and confidence in financial systems are not resolved quickly, banking turmoil could continue to weigh on the demand outlook.