Oil prices are looking for confidence as the banking crisis gripped the US economy, we saw one of the biggest oil, petroleum futures and options liquidations in history. Now US officials seem more focused on convincing the people that this banking crisis is under control. The Fed’s statement on Wednesday, March 22 stated that the US banking system is sound and resilient. Further acknowledging that recent developments are likely to result in tighter credit conditions for households and businesses and could weigh on economic activity. With the banking crisis fairly under control, Crude price shot drastically upwards and were on the track for a strong weekly gain when US crude inventories showed a buildup of 1.1 Million and the retraction from the statement made by the White House that in October it would buy back oil for the Strategic Petroleum Reserves when prices were at or below about $67-$72 per barrel. Deals by the Biden organization had pushed the SPR to a close to 50-year low in 2022. The government is likewise set to let an extra 26 million barrels out of the reserve a component of a legislative command. Which will additionally give downside risk on the Oil prices.
The recession fear in the US and the recent forecast of the FED of this year GDP to be at 0.4% down from 0.5%, and the market expectation of another 25 basis point hike in the interest rate in May, all point to a downward pressure in oil prices. On the supply front, OPEC and OPEC+ are due to meet on April 3rd where the talks would most likely be about further production cuts, in order to make the oil prices stable. Russian Delegate State head Alexander Novak said a formerly reported cut of 500,000 barrels each day (bpd) in Russia’s oil creation would be from a result level of 10.2 million bpd in February. That implies that Russia is planning to create 9.7 million bpd among spring and June, which would be a lot less modest result cut than Moscow recently showed.
In other news the Geo political tensions across the world has also impacted on crude prices, namely the Russia Ukraine tension has previously been the most important driver of Crude Prices. Recently the U.S. carried out precision air strikes on Iran-backed groups in east Syria, in retaliation for a suspected Iranian drone strike on a coalition base, the Pentagon said in a statement. The move brewed concerns over a further deterioration in U.S.-Iran relations, which in turn could disrupt crude supply from the Middle East.