Global oil prices retreated slightly on Wednesday, driven by a stronger dollar and profit-taking following recent multi-month highs. The market remains cautious amid ongoing geopolitical tensions and economic uncertainties.
Brent crude futures for May delivery slipped by 28 cents, or 0.3%, to $87.10 a barrel, while U.S. West Texas Intermediate (WTI) futures for April delivery, expiring on Wednesday’s settlement, fell by 47 cents, or 0.6%, to $83.00 a barrel. The more active May WTI contract traded at $82.41 a barrel, down 32 cents.
Analysts suggest that profit-taking might be contributing to the downward movement in prices today, despite recent support from an improving demand outlook and signs of supply reduction.
The U.S. dollar index continued to climb higher for a fifth consecutive session, impacting Asian buyer sentiment. A stronger dollar typically makes oil more expensive for investors holding other currencies, which could potentially dampen demand.
Market participants are closely watching the Federal Reserve’s interest rate announcement later on Wednesday for indications of its rate path for the rest of the year.
Both Brent and WTI settled at their highest levels since late October in the previous session, buoyed by concerns over the impact of Ukrainian drone attacks on Russian refineries and ongoing supply disruptions.
Russian refining capacity has been affected by the strikes, leading to increased crude oil exports from the country, according to trade sources. However, prolonged disruptions could potentially force Russian producers to reduce supply if they are unable to export all crude oil.
The American Petroleum Institute (API) reported a decrease in U.S. crude oil and gasoline stockpiles last week, contrary to analyst expectations of a rise. Official stockpile data from the U.S. Energy Information Administration (EIA) is awaited later in the day.
Market sentiment remains cautious as traders assess the evolving supply-demand dynamics amid geopolitical developments and economic factors.