Q3 Earnings Alert! Plan early for this week’s stock reports with all key data in 1 placeSee list

Oil dips on profit taking, markets debate supply tightness

Published 03/28/2023, 09:14 PM
Updated 03/29/2023, 03:13 PM
© Reuters. FILE PHOTO: A container ship sails along Nakhodka Bay near the oil terminal in the port city of Nakhodka, Russia August 12, 2022. REUTERS/Tatiana Meel
LCO
-
CL
-

By Arathy Somasekhar

HOUSTON (Reuters) -Oil edged lower on Wednesday in choppy trading as investors looked to pocket profits from two straight days of gains, and as markets debated supply tightness.

Brent crude closed 37 cents, or 0.5%, lower at $78.28 a barrel, while West Texas Intermediate crude fell 23 cents, or 0.3%, to $72.97.

"The markets are trying to find equilibrium," said Dennis Kissler, senior vice president of trading at BOK Financial, noting heavy fund buying over the last two days.

On the supply side, worries of tightness after an unexpected draw in U.S. oil stockpiles and a halt to some Iraqi Kurdistan oil exports were partially offset by a smaller-than-expected output cut in Russia. 

U.S. crude oil stockpiles fell unexpectedly last week, the Energy Information Administration said, as refineries ramped up operations after maintenance season and U.S. imports fell to a two-year low. [EIA/S]

EIA data also showed a larger-than-expected draw in gasoline stocks, implying strong demand heading into the summer season.

"Today's EIA report was bullish, but the broader story is much more challenged right now," said John Kilduff, partner at Again Capital LLC in New York, citing economic fears and supply concerns.

News of the surprise drop in inventories came on top of a 450,000 barrels per day (bpd) of crude export halt on Saturday from Iraq's semi-autonomous northern Kurdistan region following an arbitration decision.

Norwegian oil firm DNO said it had begun shutting down production at its fields in Kurdistan. The company's Tawke and Peshkabir fields averaged output of 107,000 bpd in 2022, a quarter of total Kurdish exports.

U.S. oil and gas activity stalled in the first quarter as production gains slowed and drillers' outlooks turned negative, a survey released by the Federal Reserve Bank of Dallas showed.

Supply concern were, however, eased by reports that Russian oil production fell by around 300,000 bpd in the first three weeks of March, less than the targeted cuts of 500,000 bpd.

© Reuters. FILE PHOTO: A container ship sails along Nakhodka Bay near the oil terminal in the port city of Nakhodka, Russia August 12, 2022. REUTERS/Tatiana Meel

Meanwhile, markets also awaited clarity on the banking crisis and U.S. Federal Reserve's plans for rate hike. Oil prices had plunged to a 15-month low on March 20 after global financial markets were roiled as investors balked at the collapse of two U.S. lenders and the rescue of Credit Suisse.

The dollar edged higher against most major peers, pausing its recent declines. A stronger greenback hurts oil demand as crude becomes more expensive for buyers who hold foreign currencies.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.