Global financial concerns ease, but Brent awaits Fed's policy decision

Front-month ICE Brent has moved upwards by $0.58/bbl on the day, to $74.94/bbl at 09.00 GMT.

PHOTO: Getty Images

Upward pressure:

Brent's price rise has been supported by renewed confidence in riskier assets as concerns surrounding the banking crisis in Europe and the US ease. "The oil market was oversold and obviously once some major bullish bets were fully unwound, prices were ready to stabilise," says OANDA senior market analyst Craig Erlam.

Russia has extended its voluntary output cut of 500,000 b/d through to June, "in accordance with the current market situation,” reports Russian state news agency TASS, citing Russia’s Deputy Prime Minister Alexander Novak.

Russia’s oil production cut would be based on “the real volume of production, and not from Russia’s production quota under the OPEC+ deal," according to a TASS industry source. According to the International Energy Agency, Russia produced 9.9 million b/d of oil in February.

Downward pressure:

Analysts at J.P. Morgan have forecast that the US economy will enter a recession this year because of higher interest rates. According to its analyst note, higher credit costs and tighter lending standards in the US are expected to “slow growth and inflation, and potentially accelerate the path to recession.”

A CNBC survey of economists and fund managers has found that 72% of respondents expect the US Federal Reserve to raise its benchmark interest rate by 25 basis points at its policy meeting today. Some survey respondents also believe that the US economy is headed for a recession in the second half of this year, CNBC has reported.

US crude inventories rose by 3.3 million bbls in the week ending 17 March, according to an American Petroleum Institute (API) estimate. This suggests a possible stock build for a second straight week. The API’s stock build projection has countered a Reuters analyst poll estimate of a 1.6 million-bbl decline.

By Konica Bhatt

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