NEW YORK: Crude prices rose about $1 a barrel on Tuesday, extending sharp gains from the previous session on supply disruption risks from Iraqi Kurdistan and hopes that banking sector turmoil is contained.
Brent crude futures gained $1, or 1.3%, to $79.12 a barrel by 1:18 p.m. EDT (1718 GMT). West Texas Intermediate US crude was up $1.01, or 1.4%, at $73.83.
Prices rallied more than $3 on Monday after Iraq was forced to halt exports of about 450,000 barrels per day (bpd) from its northern Kurdistan region through Turkey after an arbitration decision confirmed Baghdad’s consent was needed to ship the oil.
Barclays said any protracted outage of Kurdish exports until the end of the year would imply a $3 a barrel upside to the bank’s $92 a barrel Brent price forecast for 2023.
Monday’s announcement that First Citizens BancShares Inc will acquire deposits and loans of failed Silicon Valley Bank fed hopes for the sector and sent European bank shares higher.
“Concerns over banking issues have subsided for now in temporarily relieving expectations for a recession,” said Jim Ritterbusch of consultancy Ritterbusch and Associates.
A weaker US dollar, which makes oil less expensive for international buyers, also lifted crude prices, Ritterbusch added.
Oil prices were expected to draw continued support from signs of recovering demand in China.
China’s crude oil imports are expected to rise by 6.2% in 2023 to 540 million tonnes, an annual forecast by a research unit of China National Petroleum Corp showed on Monday.
Russian Deputy Prime Minister Alexander Novak on Tuesday said Russia 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.
US crude oil stockpiles were seen rising by about 200,000 barrels last week, a preliminary Reuters poll showed on Monday, but analysts said products like gasoline could fall.
“It looks like tomorrow we’re going to get inventory draws in products, so it looks like that’s seeping into the market as well,” said John Kilduff, a partner at Again Capital in New York.
The American Petroleum Institute (API) will publish its inventory data at 4:30 p.m. EDT (2030 GMT) on Tuesday and the US Energy Information Administration at 10:30 a.m. (1430 GMT) on Wednesday.
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