Crude prices rose for a third session on Wednesday as a halt to some exports from Iraqi Kurdistan raised concerns of tightening supplies and fears of a global banking crisis eased.
West Texas Intermediate U.S. crude rose 43 cents, or 0.58%, to $73.97 a barrel.
Brent crude futures gained 40 cents, or 0.50%, to $78.74 a barrel.“Worries over reduced supply from Iraq’s Kurdistan region and a relief in financial markets worried about the banking sector turmoil continued to boost investors’ risk appetite,” said Satoru Yoshida, a commodity analyst with Rakuten Securities.
“Expectations that the U.S. Federal Reserve will keep a cautious stance in raising interest rates because of banking stress also increased hopes for a stronger global economy and oil demand,” Yoshida said, predicting the bullish tone would continue this week.
Oil prices rallied this week after exports of 450,000 barrels per day (bpd) from Iraq’s semi-autonomous northern Kurdistan region were halted, following an arbitration decision that confirmed Baghdad’s consent was needed to ship the oil.
Barclays said on Tuesday any protracted outage of Kurdish exports through the end of the year would imply a $3 a barrel upside to its $92-a-barrel price forecast for Brent in 2023.
Monday’s announcement that First Citizens BancShares Inc will acquire failed Silicon Valley Bank also spurred optimism about the condition of the global banking sector.
“The recent rebound in oil prices is mainly driven by sentiment. We can see that risk sentiment has recovered to some extent, which pushed (the) global stock markets and crude oil rebound,” said CMC Markets analyst Leon Li.
A drawdown in U.S. crude oil inventories last week also lent support. U.S. crude oil inventories fell by about 6.1 million barrels in the week ended on March 24, according to market sources citing American Petroleum Institute figures on Tuesday. Gasoline inventories fell by about 5.9 million barrels, while distillate stocks rose by about 550,000 barrels.
Analysts had expected to hear that U.S. crude oil stockpiles rose last week, while distillate and gasoline inventories were seen down. The U.S. Energy Information Administration will release its weekly report at 10:30 a.m. (1430 GMT) on Wednesday.
On the supply side, Russian Deputy Prime Minister Alexander Novak said on Tuesday that Moscow needed to focus on boosting energy exports to so-called friendly countries and noted that Russian oil supply to India registered a 22-fold jump last year.