Oil futures: Crude extends gains after SVB rescue plan, Iraq oil disruption

Quantum Commodity Intelligence - Crude oil futures Tuesday were climbing higher after consolidating the previous session's firm gains, which came with an announced rescue plan for Silicon Valley Bank and the suspension of Iraqi crude deliveries via Turkey.

May ICE Brent futures were trading at $78.68/b (1920 GMT), just off from the day's two-week high of $79.20/b and compared to Monday's settle of $78.12/b. The more-liquid Jun23 contract was trading at $78.19/b.

At the same time, May23 NYMEX WTI was trading $73.29/b versus Monday's settle of $72.81/b.  

Oil prices rebounded over 4% on Monday, as financial markets steadied after the Federal Deposit Insurance Corporation (FDIC) confirmed First Citizens had entered into a purchase agreement for all deposits and loans of the beleaguered SVB, the firm which initially triggered the bank run.

"A risk-on tone reverberated across markets on the prospect of more support for the US banking sector. Commodities rallied as the focus returned to fundamentals," said ANZ commodity strategist Daniel Hynes.

"Crude oil surged higher after investors were emboldened by promised support for the US banking sector," added Hynes.

Oil markets also saw a return to fundamentals, trading higher following the suspension of pipeline deliveries of crude from northern Iraq to the Mediterranean terminal at Ceyhan.

This came after Baghdad won a landmark international court decision against the Kurdistan Region Government (KRG), which ruled Turkey had violated a bilateral treaty by facilitating independent pipeline flows from Kurdistan.

The ruling puts around 450,000 bpd of oil exports at risk and while the crude is currently being diverted into storage, limited availability means production will have to be shut in without a speedy resolution.

European products continued to find support, with France's refining capacity grinding to a halt as industrial action continued.

Gasoline cracks surged to six-month highs as Eurobob oxy E5 gasoline closed Monday at almost $25/b above ICE Brent crude, compared to around $15/b just over a week ago.

However, distillate values Monday failed to keep pace with crude, with a slew of tankers fixed from the Middle East to ship gasoil into Europe.