West Texas Intermediate (WTI) prices have gained 1.6% by midday Thursday, as banking crisis fears further eased and with no resolution in sight yet for the cut-off of the flow of Iraqi Kurdistan oil to Turkey.
At 1:39 p.m. EST on Thursday, WTI was trading up 1.66% at $74.18, for a $1.21 gain on the day, while Brent crude was trading up 1.25% at $79.26, for a $0.98 gain on the day.
Stock indexes were also trending higher on Thursday, while the dollar declined.
Banking fears have not completely dissipated, however. While optimism is rising, fears linger about the potential broader economic impact in the aftermath of the failure of Silicon Valley Bank (SVB) and Signature Bank, as well as the share crash and rescue bid for giant Credit Suisse, and pressure on other regional banks in the U.S.
With regard to Iraq, the 400,000 barrels per day that have been cut off with a pipeline shutdown over an international arbitration ruling in favor of Iraq against Turkey, continues to put upward pressure on oil prices.
While most analysts expect a quick solution, no indications of such are yet surfacing, and new analysis suggests it could be another week before we see a resolution to get the oil flowing again.
Also driving oil prices Thursday have been statements ahead of a planned meeting of OPEC+ on Monday, where delegates have indicated that the expanded cartel will likely stick to its current production cut plan. Despite the low prices prompted in part by the banking crisis fears, OPEC+ will stay the course and not react by reducing output further.
Last week, Brent plunged to below $73 a barrel, down from more than $86 per barrel right before the collapse of SVB. At just over $79 per barrel as of the time of writing on Thursday, it is still just shy of the $80 resistance mark the bulls would like to see as an indication that prices will continue to move higher for the rest of the year.
By Tom Kool for Oilprice.com
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Tom majored in International Business at Amsterdam’s Higher School of Economics, he is Oilprice.com's Head of Operations More