Oil slips away from multi-month highs

Singapore — Oil prices edged lower on Wednesday, as a stronger dollar curbed investor appetite while traders took some money off the table after benchmarks rallied to multi-month highs in the previous session.

Brent crude futures for May delivery fell 16c, or 0.2%, to $87.22 a barrel by 4.07am GMT. US West Texas Intermediate futures for April delivery, which expire on Wednesday’s settlement, fell 31c, or 0.4%, to $83.16 a barrel. The more active May WTI contract was at $82.55 a barrel, down 18c.

“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.

Weighing on Asian buyer sentiment, the US dollar index climbed higher for a fifth consecutive session after recent data pointed to a resilient US 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 effect 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 had led to an increase in crude oil exports from the country, trade sources told Reuters on Tuesday.

Oil exports from Russia’s western ports would increase by almost 260,000 barrels a day in March over an initial monthly plan to 2.22 million barrels a day, 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 US crude oil and petrol stockpiles fell last week, while distillate inventories rose, according to sources. A Reuters poll of analysts expected stocks to rise by about 10,000 barrels last week.

Official stockpile data from the US Energy Information Administration is due at 2.30pm GMT on Wednesday.

Reuters