By Florence Tan and Trixie Sher Li Yap
SINGAPORE, March 17 (Reuters) – Oil prices rose on Friday after a meeting between Saudi Arabia and Russia calmed markets at a time of optimism about demand expectations from China, although Crude was heading for the biggest weekly decline since December, hit by a banking crisis that rocked global markets.
Brent crude futures rose 30 cents to $75 a barrel at 0704 GMT, following three days of losses and rising 1.4% on Thursday.
U.S. West Texas Intermediate crude rose 21 cents to $68.53 a barrel, after closing 1.1% higher in the previous session.
Both contracts, which hit their lowest level in more than a year this week, are expected to register their biggest weekly decline since December, of around 10%.
Oil and other global assets were hit this week by the fall of Silicon Valley Bank (SVB) and Signature Bank, followed by problems at Credit Suisse and First Republic Bank, which pushed the United States and Switzerland to support them.
“Oil demand is appreciating, but we are seeing little change in fundamentals and are leaning toward financial sector volatility, keeping our price outlook unchanged for now pending updates on possible action in coming weeks,” JPMorgan analysts said in a note, referring to an OPEC+ meeting as Washington most likely prepares to start filling its strategic reserves.
The advisory committee of the Organization of the Petroleum Exporting Countries and its allies, including Russia, a group known as OPEC+, will meet on April 3.
National Australia Bank analysts noted in a note that a further drop in prices could lead OPEC+ to cut supplies, to avoid the inventory buildup expected in the second quarter.
WTI fell below $70 a barrel for the first time since December 2021, which could prompt the United States to start filling its strategic oil reserves, which are at record highs, and boost demand.
Analysts’ expectations for a recovery in Chinese demand supported a price rally at the end of the week, with U.S. crude exports to China in March hitting their highest level in nearly two and a half years.
The rebound in Chinese demand will be positive for oil prices if the upcoming data shows a good recovery in the country’s economy, said analyst Tina Teng of CMC Markets.
“Road traffic and air travel in China are increasing strongly, while signs of improvement have emerged in developed economies,” ANZ analysts said in a note to clients.
However, contagion risks between banks continue to keep investors nervous, reducing their appetite for assets such as commodities as they fear another recession could trigger a global recession and reduce demand for oil.
“The recent banking turmoil may continue to weigh on the demand outlook. These issues regarding inflation, central bank rate hikes and confidence in financial systems cannot be resolved quickly,” Teng said. (Reporting by Florence Tan and Trixie Yap; Editing in Spanish by Darío Fernández)