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Sentiment across financial markets has improved following UBS'
takeover of Credit Suisse, announced on Sunday, and after major
central banks said they would enhance market liquidity and
support the banking system.
Brent crude was up 46 cents, or 0.6%, at $74.25 per barrel at
1141 GMT. U.S. West Texas Intermediate (WTI) gained 15 cents, or
0.2%, to $67.79.
"Banking jitters may have taken a breather yesterday but remain
in play," said Stephen Brennock of oil broker PVM.
"Although an immediate crisis appears to have been averted there
are still fears of another sell-off."
The next focus for investors is the decision by the U.S. Federal
Reserve on whether and by how much to raise interest rates when
it concludes its two-day meeting.
Since the banking strife began this month, markets have revised
down expectations for the next Fed rate hike to 25 basis points
from 50 bps.
The dollar index steadied on Tuesday after hitting a five-week
low in the previous session. A stronger dollar makes oil more
expensive for holders of other currencies and so can temper
demand.
A meeting of ministers from OPEC+, which includes members of the
Organization of Petroleum Exporting Countries plus Russia and
other allies, is scheduled for April 3. OPEC+ sources told
Reuters the drop in prices reflects banking fears, rather than a
worsening supply and demand balance.
Hedge fund manager Pierre Andurand voiced a similar view about
the price drop on Tuesday, saying it was speculative and not
based on fundamentals. He also said oil will hit $140 a barrel
by the end of the year.
Also coming into view are the latest U.S. oil inventory reports,
which a Reuters survey expects to show lower crude and product
inventories. The first report, from the American Petroleum
Institute, is due out at 2030 GMT on Tuesday.
(Additional reporting by Muyu Xu in Singapore; Editing by Susan
Fenton and Barbara Lewis)
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