Oil climbs on Saudi, banking assurances; U.S. crude still under $70 

By Barani Krishnan

Investing.com — Oil prices settled up about 1% Thursday, after a 5% drop the previous day, as Saudi-Russian assurances on production cuts and remarks that the U.S. banking system was ‘safe and sound’ amid the rescue of another lender helped restore some confidence to the upside.

New York-traded , or WTI, settled up 74 cents, or 1.1%, at $68.35 a barrel. The U.S. crude benchmark earlier fell to $65.75, resting just a dime above Wednesday’s 15-month low of $65.65.

Technical charts suggested that WTI, which on Wednesday fell below $70 a barrel the first time since December 2021, remained vulnerable to a deeper downside, said Sunil Kumar Dixit, chief technical strategist at SKCharting.com.

“We have to take into cognizance that WTI dropped to $65.70 twice today, and while it attempted to move away from the lows by climbing more than $1 at one point, there was no firm support on the top end of the $60s,” said Dixit. “There is still resistance for it to get back to $70.”

London-traded settled up $1.01, or 1.4%, at $74.70. The global crude benchmark earlier plumbed a low of $71.92, resting slightly above the previous session’s trough of $71.67.

Thursday’s rebound in risk assets came after a consortium of U.S. banks led by the country’s largest — JPMorgan Chase (NYSE:) — led rescue efforts for First Republic Bank (NYSE:), the latest lender in trouble. 

Treasury Secretary Janet Yellen, meanwhile, urged depositors to have confidence in the U.S. financial system. “Our judgment is [that] this banking system overall is safe and sound,” Yellen said in testimony before the Senate. 

Crude prices suffered their worst drop for 2023 on Wednesday as a U.S. banking crisis that began with last week’s collapse of Silicon Valley Bank and Signature Bank extended towards Europe with financial troubles at Zurich-based Credit Suisse (NYSE:) — one of the world’s preeminent names in global investment banking. 

The Federal Deposit Insurance Corp also rapidly took charge of the U.S. banks that collapsed last week, before JPMorgan and the rest of the industry stepped in on Thursday to help out First Republic. All of the troubled banks experienced deposit runs, or pulling out of money by customers.

On the oil front particularly, crude prices benefited from the signals given by Saudi Arabia and Russia that they stood by to support the market with production cuts.

A day after the worst selloff in crude for this year, Saudi state media reported that Saudi Energy Minister 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. 

At the meeting, the two officials reaffirmed their support for the daily cut of 2 million barrels decided in October by the 13-member Saudi-led Organization of the Organization of the Petroleum Exporting Countries and its 10 allies steered by Russia.

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