By Peter Nurse
Investing.com — Oil prices gained Monday, boosted by renewed confidence in the global banking sector while Russian President Vladimir Putin ramped up geopolitical tensions in Europe.
By 09:35 ET (13:35 GMT), futures traded 1.5% higher at $70.33 a barrel, while the contract rose 1.4% to $75.62 a barrel.
The crude market received a boost Monday from a degree of stability in the banking industry after First Citizens BancShares (NASDAQ:) agreed to buy most of Silicon Valley’s loan book and securities as well as assume all of its deposits in the wake of SVB’s collapse earlier this month.
Reports about the U.S. authorities deliberating plans to expand emergency lending facilities also helped ease worries about the health of the banking industry.
The global oil trade might be worth close to $200 billion but is still completely reliant on the funding provided by banks.
Oil prices also drew support from Putin’s announcement of plans to station tactical nuclear weapons in neighboring Belarus, in a move designed to intimidate the West over its support for Ukraine.
NATO described his comments as “dangerous and irresponsible,” and Ukraine called for a meeting of the U.N. Security Council in response.
That said, crude prices remain marginally above the 15-month lows seen last week with data from Bloomberg suggesting that Russia’s crude flows despite Deputy Prime Minister Alexander Novak saying Moscow is close to achieving its target of cutting crude output by 500,000 barrels per day.
Russia’s shipments slid by 123,000 barrels a day to 3.11 million barrels a day in the seven days to March 24, according to tanker tracking by Bloomberg, holding above 3M (NYSE:) a day for the sixth straight week.
Additionally, China’s statistics office had said that were down 23% on the year in the first two months of 2023, implying the economic recovery in the largest crude importer in the world from the country’s reopening was slowing.
Speculators cut their long positions in the ICE Brent contract significantly last week, according to the latest positioning data.
“The latest data show that most of the gross longs that we saw added over January and February have now been closed out,” analysts at ING said, in a note. “Given the more neutral spec positioning, this leaves speculators with quite a bit of room to push the market higher. Although, obviously for that, we will need to see a change in sentiment and an easing in concern over recent developments in the banking sector.”
