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U.S. Fed begins two-day meeting on Tuesday
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Oil prices will move higher towards year end -Gunvor CEO
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API data shows surprise build in crude oil stocks
By Arathy Somasekhar HOUSTON, March 21 (Reuters) - Oil prices rose more than 2% on Tuesday, extending a retreat from a 15-month low hit the previous day, as the rescue of Credit Suisse allayed concerns of a banking crisis that would hurt economic growth and cut fuel demand.
Measures to stabilise the banking sector, including a UBS
takeover of Credit Suisse and pledges from major central banks
to boost liquidity, have calmed fears about the financial system
that roiled markets last week.
"Fears of a banking crisis and a recession have eased,
brightening the oil demand outlook at least for now," said Fiona
Cincotta, Senior Financial Markets Analyst at City Index.
Brent crude settled up $1.53, or 2.1%, at $75.32 a
barrel, while U.S. West Texas Intermediate (WTI) closed up
$1.69, or 2.5% to $69.33.
On Monday, both benchmarks ended about 1% higher after
falling to their lowest since December 2021, with WTI sinking
below $65 at one point. Last week, they shed more than 10% as
the banking crisis deepened.
"A 'risk back on' sentiment seems to be coming back to
crude, as the latest selloff may very well have been exaggerated
liquidation," said Dennis Kissler, senior vice president of
trading at BOK Financial.
The U.S. Federal Reserve started its monetary policy meeting
on Tuesday. Markets expect a rate hike of 25 basis points, down
from previous expectations of a 50 bps increase. Some top
central bank watchers have said the Fed could pause further rate
hikes or delay releasing new economic projections.
Wall Street indexes also closed sharply higher on Tuesday
as fears over liquidity in the banking sector abated and market
participants eyed the Fed.
Meanwhile, U.S. crude oil inventories rose by about 3.3
million barrels last week, according to market sources citing
American Petroleum Institute figures. That compared with Reuters
estimates for a draw of 1.6 million barrels.
Figures from the U.S. Energy Information Agency are due on
Wednesday.
A meeting of ministers from OPEC+, which includes members of
the Organization of Petroleum Exporting Countries plus Russia
and other allies, is scheduled for April 3. OPEC+ sources told
Reuters the drop in prices reflects banking fears rather than
supply and demand.
Hedge fund manager Pierre Andurand agreed the latest price
drop was speculative and not based on fundamentals. He predicted
oil will hit $140 a barrel by year end.
The CEO of energy trader Gunvor, Torbjorn Tornqvist, said he
expected oil prices to move higher toward year end as rising
Chinese demand tightens the market further.
Money managers cut their net long U.S. crude futures and
options positions in the week to March 14, the U.S. Commodity
Futures Trading Commission (CFTC) said.
(Additional reporting by Alex Lawler in London, Muyu Xu in
Singapore; Editing by Marguerita Choy and David Gregorio)
