By Peter Nurse
Investing.com — Oil prices edged lower Tuesday, handing back some of the previous session’s substantial gains as supply disruptions in Turkey added to a degree of stability in the global banking sector.
By 09:20 ET (13:20 GMT), futures traded 0.3% lower at $72.60 a barrel, while the contract fell 0.4% to $77.44 a barrel.
The two crude benchmarks recorded gains of around 3% on Monday in response to news of Turkey suspending about 400,000 barrels a day of crude exports from Kurdistan through a pipeline to the Mediterranean following a legal dispute.
This added to the general feeling of calm that fell over the banking sector following the announcement that First Citizens BancShares (NASDAQ:) will acquire deposits and loans of failed Silicon Valley Bank and reports that U.S. authorities will look at ways to ensure all of the country’s bank deposits are safe.
Prices were also underpinned by research from China’s largest oil company suggesting that the country’s imports will rise by more than 6% this year to 540 million tons, reflecting the end of COVID-19-related restrictions on economic activity.
Still, Monday’s gains are being sold into as a great deal of uncertainty exists on both sides of the demand/supply equation.
While there is a great deal of optimism about demand surging in China, the largest importer of crude in the world, the latest data showed that fell sharply in the first two months of 2023, with some facets of the economy still struggling even after the lifting of anti-COVID measures.
Additionally, the cooling of tensions in the global banking sector will probably allow central banks, in both Europe and the U.S., to continue lifting interest rates to combat still elevated levels of inflation, likely weighing on future economic activity.
On the supply side, Russian Deputy Prime Minister Alexander Novak stated earlier this week that Moscow is close to achieving its target of cutting crude output by 500,000 barrels per day.
But last week’s tanker tracking data from Bloomberg suggested that Russia’s shipments remain fairly constant.
Then there’s OPEC.
The Saudi-led 13-member Organization of the Petroleum Exporting Countries, called OPEC+ if it includes Russia, is set to hold a policy meeting at the beginning of April.
While it is unlikely to go beyond the production cut of 2M barrels per day it announced in November, the producer group is unlikely to approve of the slump in prices this month, with oil on track to post its worst month since November.
There’s more data to study later in the session as the , an industry group, is set to publish its inventory data.
This is expected to show another build in U.S. crude stocks after expanding last week by just over 3M barrels.