Oil prices rose slightly in seesaw trading on Thursday, supported by gains in the equity markets, but pressured by rising US crude stocks and concerns that supply will exceed demand this year. Anadarko photo.
Oil prices choppy following announcement of US sanctions against Russia
Oil prices rose slightly on Thursday, staying in tandem with equity markets, but were pressured by data showing rising US crude stocks and expectations that crude supply will outpace demand later this year.
By 2:30 p.m. EDT, benchmark Brent crude futures rose 27 cents to $65.16/barrel and US WTI was up 22 cents to $61.18/barrel. The Canadian Crude Index fell 20 cents to $39.46.
Oil futures and the US stock markets have moved in tandem uninterruptedly for the past 99 trading days. According to Reuters, this is the longest such stretch in two years.
Choppy trading followed an announcement by the United States that it would be imposing sanctions against some individuals indicted last month by special counsel Robert Mueller. As well groups including the Internet Research Agency, a Russian troll farm linked to divisive political posts during the 2016 US election, have been sanctioned.
“The rising tensions between the West and Russia raise the potential for reduced trade flows and economic activity, which would diminish energy demand growth,” John Kilduff, partner at investment manager Again Capital told Reuters.
Data from the US Energy Information Administration released on Wednesday reported US crude stocks rose by 5 million barrels in the week ending March 9. The EIA also reported that at 10.38 million barrels per day (b/d), US production hit another record high last week.
On Wednesday, OPEC raised its forecast for non-cartel member crude supply in 2018 to nearly almost double the growth anticipated just four months ago.
And the International Energy Agency said global crude demand will pick up this year, but may not keep up with rising supplies.
The dollar index measures the US dollar against a basket of currencies. It is down 2.4 per cent for the year, and as a result, oil is cheaper for buyers using other currencies.
“Participants have noticed prospects for improving global oil demand as highlighted by the latest IEA report as well as a persistently weak U.S. dollar index, which could further support consumption of the fuel,” Abhishek Kumar, senior energy analyst at Interfax Energy’s Global Gas Analytics told Reuters.
According to the IEA, non-OPEC supply, will grow by 1.8 million b/d this year and demand is forecast to rise by about 1.5 million b/d. The increase is mostly due to rising US production.