Global oil prices rebounded slightly in the early hours of Tuesday as concerns over banking section issues subside following UBS-Credit Suisse successful deal.

The deal eased investors confidence ahead of Federal Reserve meeting scheduled for tomorrow and boosted oil prices.

Brent crude oil, against which Nigerian oil is priced, traded rose to $73.84 per barrel while the U.S. West Texas Intermediate (WTI) crude oil gained 9 cents to $67.73 a barrel. A rebound from $3 decline recorded in the previous session.

The announcement of the UBS-Credit Suisse deal was followed by major central banks, including the U.S. Federal Reserve and European Central Bank, indicating that they would enhance market liquidity and support other banks.

Furthermore, officials with the G7 stated that they were unlikely to revise a $60-per-barrel price cap on Russian oil as planned. The officials said EU countries’ ambassadors were told by the European Commission over the weekend there was no pressing desire among the group for an immediate review.

Looking ahead, OPEC+, which includes the world’s top oil exporting countries and allies including Russia, is set for a meeting on April 3. The group agreed in October to cut oil production targets by 2 million barrels per day until the end of 2023.

Overall, the UBS-Credit Suisse deal and central bank support has helped ease investor concerns and stabilize oil prices. However, the upcoming OPEC+ meeting will be closely watched for any potential changes to oil production targets.

Rising global uncertainty concerning the rout in the banking system following the collapse of three major global banks has plunged oil prices to 15 months low on Monday as energy traders are worried that the U.S. central bank might raise interest rates even higher this week. 

Brent crude oil, against which Nigerian oil is priced, declined by 3.2% to $70.65 a barrel to settle at its lowest level since December 2021 in the early hours of Monday. While the U.S. West Texas Intermediate crude oil stood at $64.59 per barrel, down by 3.2%.

The decline in global energy market on Monday was despite UBS, Switzerland’s largest bank announcing it was acquiring troubled Credit Suisse, the country’s second-largest lender for $3 billion to prevent a banking crisis from spreading into other key sectors.

“The market focus is on current banking sector volatility and the potential for further rate hikes by the Fed,” said Baden Moore, National Australia Bank’s head of commodity research.

While the US Federal Reserve is expected to raise interest rates by 25 basis points on March 22, some executives are calling on the central bank to pause its monetary policy tightening for now but be ready to resume raising rates later.

The upcoming OPEC meeting is also another potential catalyst for the market outlook. “Further downside risk to prices increases the probability OPEC reduces production further to support prices,” Moore added, referring to the Organization of the Petroleum Exporting Countries.

Meanwhile, Goldman Sachs has cut its forecasts for Brent crude oil after prices plunged on banking and recession fears. The leading investment bank now expects brent oil to average $94 in the next 12 months and $97 in 2024, this is about $4 to $6 from $100 previously predicted.

Despite the uncertainty in the market, some analysts predict that prices will trend higher over the course of the year.

After a week of steep declines, oil prices rebounded on Friday thanks to a meeting between Saudi Arabia and Russia that calmed markets and support measures that stabilized a banking crisis.

Brent crude oil, against which Nigerian measures, rose by 1.46% to $75.79 a barrel, while U.S. West Texas Intermediate oil rose 1.76% to $69.55. Both benchmarks had hit more than one-year lows earlier in the week and were on track for their biggest weekly falls since December 2021.

The collapse of Silicon Valley Bank and Signature Bank and trouble at Credit Suisse and First Republic Bank had put pressure on oil and other global assets this week.

However, the commodity recovered some ground on Friday after the European Central Bank and U.S. lenders announced various measures to curtail the situation.

A meeting between oil producers Saudi Arabia and Russia on Thursday also helped to calm fears. Furthermore, WTI’s fall this week to less than $70 a barrel for the first time since December 2021 could spur the U.S. government to start refilling its Strategic Petroleum Reserve, which would boost demand.

Similarly, the rebound in Chinese demand for the commodity also supported the increase in price as reports shows the U.S. crude exports to China in March rose to its highest level in nearly two and a half years.

Analysts believe there is sufficient support for the oil price, with OPEC+ having to convene an extraordinary meeting.

An OPEC+ monitoring panel is due to meet on Apr. 3. Despite the rebound, conditions for volatile trading remain intact, and the oil price roller-coaster is pausing for breath but is by no means over, according to oil broker PVM’s Stephen Brennock.