The crude complex was down from earlier highs at midday in Europe Wednesday as the market saw some profit-taking amid a softer equity market and bearish indications from US stocks data.
At 1100 GMT, ICE May Brent crude futures were down 21 cents/b from Tuesday’s settle at $69.90/b, while NYMEX May light sweet crude contract was 50 cents/b lower at $64.75/b.
While the risk from geopolitics has begun to ease, oil markets were still seeing influence from the wider financial markets, sources said.
“These last two days, WTI and Brent have been trying to break the highs of 2018. They got close but they have failed for now. You have had the pressure from the equity markets, particularly US equities. The S&P 500 tried to rebound higher [from its lows this week] but failed, so I think it will be difficult to see a strong rally on oil if equities are going the other way,” said Oliver Jakob, managing director at Petromatrix.
Reports the US was considering a crackdown on Chinese investment also sent stocks tumbling, stoking trade war fears again, sources said.
At 1100 GMT, the S&P 500 was up 0.12% at 2,619 from its close on Tuesday, while the Dow was down 1.43% at 23,857 and the FTSE was down 0.29% at 6,979.
Petromatrix’s Jakob pointed to the build in US stocks as having a bearish impact on the market. According to the American Petroleum Institution, US crude oil inventory saw a build of 5.3 million barrels for the week ended March 23, in contrast to the 2.7 million barrels drawdown in the previous week. Gasoline and distillates stocks were down 5.8 million barrels and 2.2 million barrels, respectively.
A survey of analyst conducted by S&P Global Platts Monday showed crude stocks were expected to have built by 1 million barrels. Analysts also expected gasoline inventories to have fallen by 2 million barrels and distillate stocks to have declined by 1.9 million barrels.
The market will now be looking for the more definitive US Energy Information Administration data, due later Wednesday.
A stronger dollar was also putting pressure on the market, as it lowers the purchasing power of a number of key oil-buying regions. At 1100 GMT, the US dollar index was up 0.47% at 89.49.
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–Edited by Dan Lalor, firstname.lastname@example.org