Oil prices rose on Monday as investors evaluated efforts by authorities to address concerns about the global banking system.

Brent crude oil, against which Nigerian oil is priced increased by 1.03% or 77 cents, reaching $75.76 a barrel at 9:00 am, while the US West Texas Intermediate crude rose by 1.03% or 74 cents to $70 a barrel. This follows a 2.8% increase in Brent and a 3.8% rebound in WTI as concerns in the banking sector decreased.

Despite the oil fundamentals remaining on the sidelines, crude markets are observing the sentiment in the financial market, according to Vandana Hari, the founder of oil market analysis provider Vanda Insights.

Hari stated, “Expect most price action in Brent and WTI futures to occur during the Europe and US trading hours, marked by plenty of intraday volatility.” Hari added that a strong rebound is not expected until the banking crisis is fully resolved, which may take days or weeks.

In other news, First Citizens BancShares Inc announced that it will acquire the deposits and loans of Silicon Valley Bank, closing one chapter in the financial market crisis. Furthermore, the US authorities are reportedly discussing expanding emergency lending facilities, which has given hopes for additional support for bank funding.

Oil prices have also gained support from Russian President Vladimir Putin’s announcement to place tactical nuclear weapons in Belarus, which has escalated tensions in Europe. It is one of Russia’s most significant nuclear signals yet, and it serves as a warning to NATO over its military support for Ukraine.

In response, Ukraine has called for a meeting of the United Nations Security Council, and NATO criticized Putin’s “dangerous and irresponsible” nuclear rhetoric.

Despite the rise in oil prices, Russia’s Deputy Prime Minister Alexander Novak has reported that Moscow is on the verge of achieving its target of reducing crude output by 500,000 barrels per day (bpd) to around 9.5 million bpd.

However, according to industry sources and Reuters calculations, Russia’s crude exports are expected to remain steady as it cuts refinery output in April. Since September 2022, Russian crude stocks have been increasing, and experts suggest that if Russia wants to draw down the inventories it has built, output cuts may need to be extended beyond June.

Meanwhile, in France, industrial action is affecting refineries, reducing crude demand and fuel production. Investors are awaiting China’s manufacturing and services purchasing managers’ indexes for cues on demand from the world’s leading crude oil importer.

According to Baker Hughes Co, oil rigs rose by four to 593 last week in the US, up for the first time in six weeks, while gas rigs held steady at 162.

Oil prices saw a slight decrease on Wednesday following indications of weak demand and the anticipation of a crucial interest rate decision by the U.S. Federal Reserve.

Brent crude oil, which had risen almost 3% earlier in the week, fell by 0.40% to $75.02 a barrel, while U.S. West Texas Intermediate (WTI) crude oil was down 0.42% at $69.38.

Data from the American Petroleum Institute released on Tuesday put the demand for oil into question after revealing an unexpected increase in U.S. crude inventories, contradicting analyst predictions of a decline.

Oil prices were also impacted by an unexpected rise in UK inflation in February, raising concerns of more interest rate hikes a day before the Bank of England’s latest interest rate decision.

The global market is waiting to assess the decision of the U.S. Federal Open Market Committee (FOMC) on interest rates later today to decipher the future direction of price action.

While the expected 25 basis point rate hike was a turnaround from the previously anticipated 50 basis point rate rise, analysts predict that it won’t have a significant impact on oil prices.

Craig Erlam, senior market analyst at OANDA, said, “It would be a big shock if the Fed reverted back to larger rate hikes now considering everything that’s happened this past couple of weeks.”

Last week, Brent prices hit their lowest levels since 2021 on concerns that the drop in bank shares could lead to a global recession and reduced fuel demand.

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.