Oil prices soften; banking crisis and Chinese demand in focus
by CNBC
2023-03-28
Some pumpjacks operate while others stand idle in the Belridge oil field near McKittrick, California. Oil prices rose in early Asian trade on the prospect that a stalled Iran nuclear deal and Moscow's new mobilization campaign would restrict global supplies.
Crude prices retreated on Tuesday after rallying the previous session, with markets focused on developments in the banking crisis and indications of strengthening demand in China.
Prices eased after rising at the fastest pace in more than four months on Monday. West Texas Intermediate U.S. crude fell 4 cents, or 0.05%, to $72.77. Brent crude futures dropped 30 cents to $77.82 a barrel by 0312 GMT.
"Though risks remain in the banking system amid the recent event, dip-buys in crude oil could be the prevailing trend in the near term," said Tina Teng, an analyst at CMC Markets.
Prices rose in the previous session after Turkey stopped pumping crude from Kurdistan via a pipeline following an arbitration decision that confirmed Baghdad's consent was needed to ship the oil.
Monday's announcement that First Citizens BancShares Inc will acquire deposits and loans of failed Silicon Valley Bank SIVB.O spurred optimism about the condition of the banking sector that has roiled financial markets.
Oil prices were also likely to continue drawing support from indications of recovering Chinese demand.
China's crude oil imports are expected to rise 6.2% in 2023 to 540 million tonnes, according to an annual forecast by a research unit of China National Petroleum Corp on Monday.
"China's manufacturing and services PMIs will be a major economic driver to oil prices as positive data is most likely to further improve the demand outlook," Teng said.
U.S. crude oil stockpiles were seen rising about 200,000 barrels last week, a preliminary Reuters poll showed on Monday.
The American Petroleum Institute (API), an industry group, will publish its inventory data at 4:30 p.m. EDT on Tuesday and the U.S. Energy Information Administration at 10:30 a.m. on Wednesday.
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