Oil prices steady as news of Saudi, Russia meeting calms investors

Oil prices steadied on Thursday after dropping to near 15-month lows earlier in the session, supported by reports that top producers Saudi Arabia and Russia met to discuss ways to enhance market stability. Brent crude futures rose 26 cents, or 0.4%, to $73.95 a barrel, while the West Texas Intermediate crude futures rose 19 cents, or 0.3%, to $67.80 a barrel. Earlier in Thursday’s session both contracts had dropped by more than $1 a barrel to near 15-month lows. On Wednesday, the third straight day of declines, U.S. crude fell below $70 a barrel for the first time since Dec. 20, 2021. Saudi state media reported that the country’s energy minister Prince Abdulaziz bin Salman and Russian deputy prime minister Alexander Novak met in the Saudi capital to discuss the OPEC+ group’s efforts to maintain market balance.

“That news woke up the bulls in the market, and it was kind of expected with the sell-off that we have seen over the past few sessions,” said John Kilduff, partner at Again Capital. OPEC+ delegates told Reuters the producer group considers this week’s slide in oil prices to be driven by financial fears, not any imbalance between demand and supply, and expects the market to stabilise. Oil prices were also supported by a broader recovery in financial markets after Credit Suisse was thrown a lifeline by Swiss regulators, and Treasury Secretary Janet Yellen assured lawmakers that the U.S. banking system remains sound. The U.S. dollar weakened on Thursday, making greenback-denominated oil cheaper for holders of foreign currencies and boosting demand. Both OPEC and the International Energy Agency (IEA) have forecast stronger oil demand this week, but oversupply concerns continue to weigh on the market.

The IEA said commercial oil stocks in developed OECD countries had hit an 18-month high while Russian oil output in February stayed near levels registered before the war in Ukraine, despite sanctions on its seaborne exports. The ECB’s decision to hike interest rates, as expected, also weighed on oil prices. “Market sentiment remains fragile as investors continue to weigh up the latest developments in the banking sector both in the US and in Europe,” said Fiona Cincotta, Senior Financial Markets Analyst at City Index.