Oil pares gains after hitting 2024-high over delayed US Fed rate cuts; Brent down to $82/bbl

Brent crude futures were down 58 cents or 0.7 per cent to $82.38 a barrel, while US West Texas Intermediate crude futures inched down 67 cents or 0.8 per cent to $78.46 a barrel, according to news agency Reuters.

Back home, on the Multi Commodity Exchange (MCX), crude oil futures due for a March 19 expiry, was last trading 1.26 per cent lower at ₹6,517 per bbl, having swung between ₹6,461 and ₹6,563 per bbl during the session, against a previous close of ₹6,600 per barrel.

Also Read: Oil prices rise 2% on smaller build in US crude stocks as Fed signals rate cuts in 2024; Brent nears $84/bbl

What’s weighing on crude oil prices?

-Oil prices retreated from near a 2024 high hit on Wednesday after US data showed oil stocks rose less than expected and fuel inventories fell, in a sign of robust demand.

-Narkets were bracing for the likelihood that the US Federal Reserve could delay its first interest rate cut to the second half of this year in a boost to the US dollar, according to a Reuters poll of forex strategists. A strong greenback dents demand for dollar-denominated oil among buyers using other currencies.

-Fed Chair Jerome Powell said on Wednesday continued progress on inflation “is not assured”, though the US central bank still expects to reduce its benchmark interest rate this year.

-Meanwhile, China’s import and export growth beat estimates, suggesting global trade is turning a corner in a positive signal for policymakers as they try to shore up economic recovery.

-China posted a 5.1 per cent rise in imports in the first two months of 2024 from a year earlier to about 10.74 million barrels per day (bpd), customs data showed on Thursday, as crude purchases ramped up to meet fuel sales during the Lunar New Year holiday.

-Analysts said that China’s trade balance data is a positive sign for the oil market’s demand outlook. However, the risk-off sentiment dominated financial markets as stocks are retreating on Wall Street.

-Data on Wednesday showed crude inventories rose for a sixth week in a row, building by 1.4 million barrels. Gasoline and distillate stocks fell more than expected, the EIA data also showed.

Also Read: Explained | Why did OPEC+ members extend oil output cuts to mid-2024

Where are prices headed?

Crude oil exhibited significant volatility and experienced gains following remarks from the US Federal Reserve Chairman and heightened expectations for a rate cut. The US EIA weekly inventory data, released on Wednesday, further bolstered crude oil prices. 

According to the EIA, US crude oil inventories saw an increase of 1.2 million barrels for the week ending March 1, a figure below the anticipated 2.4 million barrels, which played a role in supporting crude oil prices, said analysts.

‘’Looking ahead, we anticipate crude oil prices to maintain their volatility throughout the session. Crude oil is expected to find support at $77.80–$77.10, with resistance situated at $79.30–$80.00. In terms of the INR, crude oil is projected to have support at ₹6,510–6,440 and face resistance at ₹6,670–6,720,” said Rahul Kalantri, VP Commodities, Mehta Equities Ltd.

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Published: 07 Mar 2024, 10:13 PM IST