March 20, 2024 (MLN): Oil prices cooled off on Wednesday after rallying to multi-month highs.
Brent crude traded near $87.1 per barrel, down by 0.32% on the day.
While West Texas Intermediate crude (WTI) was at $82.42 per barrel, down by 0.37% on the day.
Last week, both benchmarks recorded a gain of about 4%.
"Profit-taking could be a reason for the downside movement today," Auckland-based independent analyst Tina Teng said, adding that the recent price rally has been supported by improving demand outlook and signs of supply reduction, as Reuters reported.
Weighing on Asian buyer sentiment, the U.S. dollar index climbed higher for a fifth-straight session after recent data pointed to a resilient U.S. economy.
A stronger dollar makes oil more expensive for investors holding other currencies, dampening demand.
Traders looked ahead to the Federal Reserve's interest rate announcement later on Wednesday for signs of its rate path for the rest of the year.
Both Brent and WTI settled at their highest levels since late October in the previous session as market participants assessed the impact on crude and petroleum supplies from Ukrainian drone attacks on Russian refineries.
"Supply risks surrounding Russian refined products continue to provide support at a time when the market is set to tighten following the rollover of additional voluntary cuts from OPEC+ into 2Q24," ING analysts including Warren Patterson said in a note.
A drop in Russian refining capacity as a result of the strikes has led to an increase in crude oil exports from the country, trade sources told Reuters on Tuesday.
Oil exports from Russia's western ports will increase by almost 260,000 barrels per day in March over an initial monthly plan to 2.22 million bpd, they said.
"If these disruptions are prolonged, it could eventually force Russian producers to reduce supply if they are unable to export all of this crude oil," Patterson said.
"These attacks are more bullish for refined products in the immediate term."
The American Petroleum Institute reported U.S. crude oil and gasoline stockpiles fell last week, while distillate inventories rose, according to sources.
Official stockpile data from the U.S. Energy Information Administration is due at 07:30?pm PST on Wednesday.
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Posted on: 2024-03-20T12:30:25+05:00
