HOUSTON (March 21): Oil rose on Tuesday, extending a recovery from a 15-month low hit the previous day, as the rescue of Credit Suisse allayed concerns of a banking crisis that would hurt economic growth and cut fuel demand.

Sentiment across financial markets improved after the UBS takeover of Credit Suisse, announced on Sunday, and after major central banks said they would enhance market liquidity and support the banking system.

"Fears of a banking crisis and a recession have eased, brightening the oil demand outlook at least for now," said Fiona Cincotta, senior financial markets analyst at City Index.

Brent crude was up 82 cents, or 1.1%, at US$74.57 a barrel by 11.12am ET (17.12 GMT). US West Texas Intermediate (WTI) gained 74 cents, or 1.1%, to US$68.38.

"A 'risk back on' sentiment seems to be coming back to crude, as the latest selloff may very well have been exaggerated liquidation," said Dennis Kissler, senior vice-president of trading at BOK Financial.

Investors now await the outcome of the Federal Reserve's monetary policy meeting that started on Tuesday.

Since the banking strife began this month, markets have lowered projections for the next Fed rate hike to 25 basis points (bps), down from previous expectations of a 50 bps increase.

Some top central bank watchers have also said the Fed could pause further rate hikes given recent trouble among banks or even delay releasing new economic projections because the outlook is so clouded.

The dollar index slipped on Tuesday after hitting a five-week low in the previous session. A weaker US dollar can support oil demand because it makes the commodity cheaper for buyers holding other currencies.

Wall Street's main indexes climbed after the rescue of Credit Suisse calmed nerves.

Meanwhile, a meeting of ministers from Opec+, which includes members of the Organization of Petroleum Exporting Countries (Opec) 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.

The CEO of energy trader Gunvor said he expected oil prices to move higher towards the end of the year as rising Chinese demand tightens oil balances further.

Hedge fund manager Pierre Andurand voiced a similar view, saying it was speculative and not based on fundamentals. He also said that oil will hit US$140 a barrel by the end of the year.

Attention is now turning to the inventory report from the American Petroleum Institute due at 2030 GMT on Tuesday. A Reuters survey expects lower crude and product inventories.

"The damage from the financial sector will still need to calm, and traders will be looking for verification that US demand will not substantially contract," BOK Financial's Kissler said.