Oil Prices Slip as Dollar Strengthens and Traders Take Profits
In a market influenced by a stronger dollar and profit-taking, oil prices dipped on Wednesday. Brent crude futures for May delivery dropped 16 cents to $87.22 a barrel, while US West Texas Intermediate futures for April delivery fell 31 cents to $83.16 a barrel.
Market analyst Tina Teng suggested that profit-taking may be driving the slight decrease in prices, despite a recent rally supported by an improving demand outlook and signs of supply reduction.
The US dollar index’s rise for the fifth consecutive session dampened Asian buyer sentiment, making oil more expensive for investors holding other currencies. Traders are now looking to the Federal Reserve’s interest rate announcement for clues on the rate path for the rest of the year.
The recent drone attacks on Russian refineries in Ukraine have added supply risks to the market, supporting prices. ING analysts, including Warren Patterson, noted that these supply risks, combined with OPEC+ voluntary cuts, are expected to tighten the market in the second quarter of 2024.
The attacks have led to a drop in Russian refining capacity, resulting in increased crude oil exports from the country. Trade sources reported that oil exports from Russia’s western ports are set to increase by almost 260,000 barrels per day in March.
The American Petroleum Institute reported declines in US crude oil and gasoline stockpiles, with an increase in distillate inventories. Official stockpile data from the US Energy Information Administration is expected later on Wednesday.