Crude prices eased on Tuesday, following a rally in the previous session, as the market focused on developments in the banking crisis and signs of increasing demand in China. West Texas Intermediate U.S. crude fell 4 cents, or 0.05%, to $72.77, while Brent crude futures dropped 30 cents to $77.82 a barrel by 0312 GMT. These prices come after Monday’s rise, which saw prices climb at the fastest pace in over four months.
Tina Teng, an analyst at CMC Markets, commented that, “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.” She suggests that despite concerns about the banking system, crude oil is still a good investment for the near future.
Oil 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 (FCNCA.O) would acquire deposits and loans of failed Silicon Valley Bank (SIVB.O) also spurred optimism about the condition of the banking sector, which has roiled financial markets.
Additionally, oil prices are likely to continue drawing support from indications of recovering Chinese demand. According to an annual forecast by a research unit of China National Petroleum Corp on Monday, China’s crude oil imports are expected to rise 6.2% in 2023 to 540 million tonnes. Teng said, “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.”
Lastly, a preliminary Reuters poll showed on Monday that U.S. crude oil stockpiles were seen rising about 200,000 barrels last week. 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 will release its data at 10:30 a.m. on Wednesday.