At 11:23 am Singapore time (0323 GMT), the ICE Brent May contract was down by 37 cents/b (0.55%) from the March 9 settle at $67.15/b, while the April NYMEX light sweet crude contract was 25 cents/b (0.39%) lower at $63.76/b.
The markers have fallen 2.65% and 3.15%, respectively to date this week as crude oil markets try to find balance after the OPEC+ coalition’s surprise decision last week to keep its production steady in April sent prices surging.
“The declines in oil benchmarks this week indicate that the optimism following last week’s OPEC+ surprise had been overstretched and the pullback in oil prices was likely warranted based on technical factors, with the 14-day RSI easing away from overbought territory,” Han Tan, market analyst at FXTM, told S&P Global Platts on March 10.
“Heightened expectations for the recovery in US oil production, fueled by the [Energy Information Administration’s] upward revisions to output levels for this year and next, may also dampen the upside for oil prices,” Tan added.
The EIA has revised up its outlook for 2021 production by 100,000 b/d to 11.1 million b/d, and for 2022 production by 500,000 b/d to 12 million b/d, Platts reported earlier.
API data released late March 9 showed a 12.8 million-barrel build in US crude inventories in the week ending March 5. The market reacted in early March 10 trade by pushing oil prices down.
“Oil prices slid further on a build in crude oil inventories of 12.792 million barrels for the week ending March 5,” said Stephen Innes, chief global market strategist at Axi, in a March 10 note.
Innes however cautioned against putting too much weight on the API data: “I think it best to interpret the API data with a pinch of salt as it is unclear whether the reported stock build is a laggard effect of [EIA’s] large build printed last week, or whether we will see another large build from the EIA [in its report due later March 10].”
The markets took solace in the much more bullish product data from the API, which showed 8.5 million-barrel and 4.8 million-barrel draws in US gasoline and distillate inventories, respectively. These movements in product inventories could be indicative of improved downstream fundamentals, which bodes well for the entire oil complex.
The demand outlook for the oil complex remained bright, and could receive a further boost later March 10 when the US House of Representatives is expected to vote on a Senate-approved $1.9 trillion stimulus package.
“The build in crude inventories is set to be mitigated by the sustained demand recovery, especially as more US fiscal stimulus rolls out this month and virus-curbing measures are eased,” Tan said.
