Crude oil prices rose in the third session on Wednesday as the halting of some exports from northern Iraq raised concerns about shrinking supply and fears over the global banking crisis eased.
Brent crude futures gained 16 cents, or 0.20%, at 0357 GMT to $78.30 a barrel, while West Texas Intermediate (WTI) crude rose 35 cents, or 0.48%, to $73.69 a barrel.
Concerns about the reduced supply from Iraq’s semi-autonomous northern Kurdistan region and the relaxation in financial markets, which worried about the turmoil in the banking sector, continued to increase the risk appetite of the investors.
The expectation that the US Federal Reserve will maintain a cautious stance in raising interest rates due to banking stress raised hopes for a stronger global economy and oil demand. The uptrend is expected to continue this week.
Oil prices rose this week after exports of 450,000 barrels per day from Iraq’s semi-autonomous northern Kurdistan region were halted in an arbitration decision confirming that Baghdad’s approval is required to ship the oil.
It means that any prolonged interruption to exports will add an increase of over $3 per barrel in 2023 price projections for Brent.
Monday’s announcement that First Citizens BancShares Inc would acquire failed Silicon Valley Bank also fueled optimism about the state of the global banking industry.
The recent recovery in oil prices is mainly driven by market sentiment. We can see that risk sentiment has recovered to some extent, supporting global stock markets and crude oil recovery.
Last week’s decline in US crude inventories also provided support. U.S. crude inventories fell by about 6.1 million barrels in the week ended March 24, according to market sources citing figures from the American Petroleum Institute (API) on Tuesday. Gasoline stocks fell by about 5.9 million barrels, while distillate stocks increased by about 550,000.
Analysts had expected to hear that US crude stockpiles rose last week, while distillate and gasoline stocks fell. The U.S. Energy Information Administration (EIA) will release its weekly report on Wednesday at 10:30 local time (1430 GMT).
On the supply side, Russian Deputy Prime Minister Alexander Novak said on Tuesday that Moscow should focus on increasing energy exports to friendly countries, noting that Russia’s oil supply to India increased 22 times last year.
