Oil prices fell on Wednesday as a strengthening dollar dampened investor appetite and traders turned to selling after benchmarks rose to multi-month highs in the previous session.
May Brent crude futures were down 28 cents, or 0.3%, at $87.10 a barrel at 0711 GMT. West Texas Intermediate futures (WTI) for April delivery, due at Wednesday’s settlement, fell 47 cents, or 0.6%, to $83.00 a barrel. The more active May WTI contract was down 32 cents at $82.41 a barrel.
The recent price increase has been supported by an improving demand outlook and signs of reduced supply. Profit-taking may be one reason for today’s downward move.
Weighing on Asian buyer sentiment, the US dollar index rose for the fifth consecutive session as the latest data suggested the US economy remains resilient.
A strengthening dollar makes oil more expensive for investors holding other currencies, reducing demand.
Investors are eagerly awaiting the Federal Reserve’s interest rate announcement on Wednesday for signs of interest rates for the rest of the year.
Both Brent and WTI hit their highest levels since late October in the previous session as market participants assessed the impact of Ukraine’s drone attacks on Russian refineries on crude oil supplies.
The decline in Russia’s refinery capacity has led to an increase in crude oil exports from the country. Supply risks for Russian refined products continue to provide support at a time when the market is poised to tighten following the rollover of OPEC+’s additional voluntary cuts into the 2nd quarter. These attacks point to further bullish gains for refined products in the near term.
It was stated that oil exports from Russia’s western ports will increase by almost 260,000 barrels per day in March, reaching 2.22 million per day compared to the initial monthly plan.
The American Petroleum Institute (API) reported that crude oil and gasoline stocks in the USA decreased last week, while distillate stocks increased. Analysts expected inventories to rise by about 10,000 barrels last week.
Official oil stock data from the US Energy Information Administration (EIA) will be released at 14:30 GMT on Wednesday.
