Oil prices were broadly stable on Wednesday, March 27, after US crude stockpile rose lesser than expected and also dragged by indications that the Organization of Petroleum Exporting Countries (OPEC) is unlikely to change its output policy at its technical meeting next week. Crude prices have pared gains since hitting last week to their highest levels since October, remaining about three per cent above the average closing price in the first week of March.
Brent crude futures for May were down 23 cents, or 0.3 per cent, to $86.02 per barrel while the more actively traded June contract was down 21 cents, or 0.3 per cent, at $85.42. US West Texas Intermediate (WTI) crude futures for May delivery fell 13 cents, or 0.2 per cent, to $81.49.
Both benchmarks had fallen by more than $1 in earlier trading. On the multi commodity exchange (MCX), crude oil futures were last trading 0.62 per cent lower at ₹6,775 per barrel against a previous close of ₹6,817 per barrel.
Also Read: Explained | Why did OPEC+ members extend oil output cuts to mid-2024
What’s dragging crude oil prices?
-The US Energy Information Administration (EIA) released data on Wednesday showing crude stocks were up 3.2 million barrels in the week ending March 22, compared to an expected decline of 1.3 million barrels
-OPEC and allies led by Russia (OPEC+), are unlikely to make any oil output policy changes until a full ministerial gathering in June, sources told news agency Reuters, ahead of next week’s meeting to review the market and members’ implementation of output cuts. OPEC this month agreed to extend output cuts of about 2.2 million barrels per day (bpd) to the end of June.
-Crude has rallied this year on Ukrainian drone attacks on Russian oil infrastructure and extended supply cutbacks by OPEC and its allies. Still, a challenging economic outlook in China and robust non-OPEC supply growth remain headwinds.
Where are prices headed?
The generally more positive tone across markets in recent weeks has some banks calling for higher prices. JPMorgan Chase & Co. said that crude could hit $100 per barrel if Russia’s recent decision to cut output is not balanced by other measures.
Analysts said that oil prices are stuck in their last week’s consolidation range as one tries to look ahead to clarity on the supply-demand equation.
‘’Supply-side factors so far have dominated the prices moves due to Russia-Ukraine attacking each other’s energy infrastructure, the Israel-Hamas was continues in the middle-east, and Houthi’s disrupting the supply via red sea with frequent attacks of ships/ cargos,” said Pranav Mer, Vice President, EBG – Commodity & Currency Research, JM Financial Services Ltd.
‘’Since the risk premium already has priced in – we are seeing some consolidative moves, but the underlying bias is expected to remain positive. Technically, we still maintain a positive view on prices with support at 6,720/6,690, while on the upside prices may test 6900-6990 levels,” added Mer.
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Published: 27 Mar 2024, 10:31 PM IST