Crude in New York rose to trade near $69 a barrel

Oil rose as assurances that the federal government will work to contain the banking crisis sent some investors back into riskier assets, breaking a series of sessions in which the commodity traded in oversold territory.

Crude in New York rose to trade near $69 a barrel after being oversold on the nine-day Relative Strength Index for five sessions. US officials are examining ways to extend protection for all deposits to boost confidence in the financial system, and markets are betting that the Fed will ease the pace of monetary tightening at its meeting on Wednesday.

Oil prices had been range-bound this year before breaking down as banking turmoil magnified fears of a global recession. Resilient Russian crude flows and doubts about the strength of China’s economic recovery have also weighed on prices.

For traders to become more bullish, they need reassurance that US demand will not be significantly impacted and demand from China will continue to grow, said Dennis Kissler, senior vice president of trading at BOK Financial Securities.

“It seems that now the supply is more constant and the demand has become more inelastic, which keeps crude oil in a volatile trading pattern”Kissler said.

Despite the recent downswing, major oil traders are forecasting crude to rise on rising demand and tight supply. High-level industry figures have forecast second-half prices ranging from $80 to $140 a barrel.