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Crude oil higher; U.S. stockpiles draw and supply disruptions help

Published Mar 30, 2023 08:57AM ET Updated Mar 30, 2023 09:14AM ET
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By Peter Nurse 

Investing.com -- Oil prices traded higher Thursday, near two-week highs, after a surprise drop in U.S. crude stocks and as supply disruptions persist.

By 09:00 ET (13:00 GMT), U.S. crude futures traded 0.7% higher at $73.47 a barrel, while the Brent contract rose 0.6% to $78.00 a barrel.

The market continues to be supported by a shortfall of Iraqi exports from the Turkish port of Ceyhan following a legal dispute, depriving the global market of roughly 400,000 barrels of oil per day.

"The standoff with Kurdish oil flows via Turkey continues and the halting of pipeline flows has meant that producers in the Kurdish region have had to start reducing output," said analysts at ING, in a note. "Producer DNO has said it has started an orderly shutdown of its fields in the region."

This has meant that the global market basically remains in deficit even after Reuters reported that Russia didn’t cut its oil production as much as it threatened over the last month, putting the actual decline in output at 300,000 barrels a day, rather than the announced 500,000 b/d.

Additionally, U.S. crude oil stockpiles fell unexpectedly in the week to March 24, with the Energy Information Administration recording a 7.5-million-barrel drop in crude inventories to a two-year low, the largest draw in commercial inventories since November and only the second decline in stocks so far this year.

"The draw was driven largely by a fall in imports," ING added, "with crude oil imports falling by 847Mbbls/d WoW. Exports remained above 4MMbbls/d over the week."

Still, both crude benchmarks remain over 8% lower year-to-date, as a great deal of uncertainty exists on both sides of the demand/supply equation.

With both the Federal Reserve and the European Central Bank, and the Bank of England for that matter, expected to raise interest rates at least one more time this year, demand from the Western economic powerhouses could be stunted this year.

A lot seems to be resting on China’s economic recovery in terms of demand growth, and this means Friday’s PMI data will be closely watched as market watchers try to gauge the strength of the recovery in the world’s second largest economy in the wake of the lifting of pandemic restrictions.

Additionally, the Organization of the Petroleum Exporting Countries and allies, including Russia, a group known as OPEC+, is set to hold a policy meeting at the beginning of April.

The producer group is not expected to agree to another output cut beyond the 2M barrels per day it announced in November, but its views on how it sees the market going forward could alter perceptions.

Crude oil higher; U.S. stockpiles draw and supply disruptions help
 

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Comments (4)
Robert Cutler
Robert Cutler Mar 30, 2023 9:51AM ET
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Putin's age
First Last
First Last Mar 30, 2023 9:51AM ET
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Still lower than the price at which Biden sold from the SPR.
Robert Cutler
Robert Cutler Mar 30, 2023 9:50AM ET
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Crude oil $PPB is seeking
EL LA
EL LA Mar 30, 2023 9:38AM ET
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US is supposed to start delivering 26 million barrels from the SPR on April 1 according to latest news. Who was the buyer?
Rubbing Hands
Rubbing Hands Mar 30, 2023 9:38AM ET
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China!
First Last
First Last Mar 30, 2023 9:38AM ET
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Rubbing Hands  If true, then that's oil China won't be buying from Russia.
Yama Fazel
Yama Fazel Mar 30, 2023 9:27AM ET
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I dont understand that why USA doesnt increase Oil output AT very high Level if wants to bring the Inflation down and to win war in Ukraine against Russia. First if energy price come down than the Inflation decrease also and May be they can come out of Bank crises too. Second if the energy price come down it makes difficult for Russia to Make money in the Market and would not affort its War in Ukraine.
First Last
First Last Mar 30, 2023 9:27AM ET
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US crude production is at post-Trump high and nat gas is at all-time high
 
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