Mar 20 2024: On Wednesday, oil prices experienced a slight decline, influenced by a stronger dollar that tempered investor interest. Traders also took profits after benchmarks surged to multi-month highs in the previous session.
Brent crude futures for May dropped by 28 cents or 0.3% to $87.10 a barrel by 0711 GMT. U.S. West Texas Intermediate (WTI) futures for April delivery, expiring on Wednesday’s settlement, fell by 47 cents or 0.6% to $83.00 a barrel. The more active May WTI contract was at $82.41 a barrel, down by 32 cents.
Tina Teng, an independent analyst based in Auckland, suggested that profit-taking might have contributed to the downward movement, noting that the recent price surge was supported by an improving demand outlook and signs of supply reduction.
Asian buyer sentiment was dampened by the U.S. dollar index’s fifth consecutive session of gains, reflecting a resilient U.S. economy in recent data releases. A stronger dollar typically makes oil more expensive for investors using other currencies, thus reducing demand.
Market participants awaited the Federal Reserve’s interest rate announcement later in the day for insights into its rate trajectory for the remainder of the year.
In the previous session, both Brent and WTI settled at their highest levels since late October. This was driven by assessments of the impact on crude and petroleum supplies following Ukrainian drone attacks on Russian refineries.
Analysts at ING, including Warren Patterson, noted that supply risks related to Russian refined products continued to support prices, especially as the market is expected to tighten due to additional voluntary cuts from OPEC+ into the second quarter of 2024.
The strikes on Russian refineries have led to increased crude oil exports from Russia, according to trade sources. Russian exports from western ports are projected to rise by nearly 260,000 barrels per day in March compared to initial monthly plans.
The American Petroleum Institute reported a decrease in U.S. crude oil and gasoline inventories last week, while distillate inventories rose. Official stockpile data from the U.S. Energy Information Administration was scheduled for release at 1430 GMT on Wednesday.
