Oil headed for its biggest weekly loss this year after banking turmoil widened global markets, with investors awaiting a possible response to the defeat by OPEC and its allies.
West Texas Intermediate futures rose above $69 a barrel on Friday, but are still down 10% for the week. The heads of OPEC+ from Saudi Arabia and Russia met in Riyadh on Thursday and discussed the group’s efforts to “promote market balance and stability.” The cartel monitoring committee, which can recommend a change in production, will meet on April 3.
OPEC+ is likely to sit back and control the market unless Brent falls below $70 a barrel for a sustained period, according to industry consultant FGE, while Energy Aspects Ltd.
Trouble at Credit Suisse Group AG combined with options covering to send oil to its lowest level in 15 months this week. While markets are starting to see some stability, investors will also be watching to see if the Federal Reserve will raise interest rates again next week after the turmoil.
“External factors continue to dictate oil price action,” said Warren Patterson, head of commodities strategy at ING Groep NV. “The scale of the oil sale will likely be a concern for OPEC+, but they are unlikely to take quick action, instead likely waiting for the dust to settle.”
Oil may struggle to make solid near-term gains, with OPEC this week forecasting a modest surplus in the second quarter, a typical period of soft demand ahead of the summer. The International Energy Agency also said the market already had a surplus of stubborn Russian output.
