Oil prices rose toward $75 on Tuesday as a bailout of Swiss bank Credit Suisse eased fears that risks in the banking sector could slow economic growth and oil demand.
On the London market, a barrel of oil is trading for $75, while the price of WTI oil is $69.26, according to OilPrice.com data.
Markets were rocked last week by turmoil in the banking sector caused by problems at mid-sized US banks and Swiss lender Credit Suisse. The mood improved after UBS took over Credit Suisse. Central banks in the Eurozone, the US, Switzerland, Great Britain, Japan, and Canada announced they would increase their reliance on the currency exchange mechanism to ensure liquidity in the financial system.
Traders fear that the crisis in the banking sector could dampen economic growth, which would also mean weaker oil demand.
Investors’ attention is now on the session of the US central bank, where the Federal Reserve will decide on interest rates.
Since the problems in the banking sector began to emerge, markets have lowered estimates of a quarter-percentage-point increase in US interest rates. By the end of February, the Fed should raise them by half a percentage point.
In such an environment, the dollar index fell again after briefly dipping to a five-week low earlier. A weaker dollar can boost demand for oil, as it strengthens buyers’ purchasing power with other currencies.
Consideration of production policy
Traders will also closely monitor the meeting of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, which will reconsider production policy in early April.
OPEC+ sources said the price drop reflected concerns for banks rather than an upset balance between supply and demand.
On Monday, OPEC announced that the price of a barrel of its members’ oil basket fell to $70.11.
