- US crude oil stockpiles surprisingly decreased last week.
- Petroleum exports from Iraq’s semi-autonomous northern Kurdistan region were suspended.
- Russian oil output decreased by a lower-than-expected 300,000 bpd in the initial three weeks of March.
Oil edged lower on Wednesday in choppy trading as investors looked to cash in on gains from two straight days of gains.
On the supply side, there were concerns about a shortage following an unexpected reduction in US oil inventories and the suspension of some oil exports from Iraqi Kurdistan. A smaller-than-expected output reduction in Russia partly eased these concerns.
According to the Energy Information Administration, US crude oil stockpiles surprisingly decreased last week. Refineries resumed operations following the maintenance season, and imports to the country hit a two-year low.
Additionally, EIA data revealed a larger-than-anticipated draw in gasoline stocks, suggesting robust demand as summer approaches.
News of the unexpected decline in inventories followed a Saturday suspension of 450,000 bpd of petroleum exports from Iraq’s semi-autonomous northern Kurdistan region. This was due to an arbitration decision.
DNO, a Norwegian energy company, announced that it had started to halt production at its Kurdistan-based fields. In 2022, the company’s Tawke and Peshkabir fields produced an average of 107,000 bpd or 25% of all Kurdish shipments.
Supply concerns, however, were eased by reports that Russian oil output decreased by about 300,000 bpd in the first three weeks of March. This was less than the 500,000 bpd reductions that were intended.
According to a Federal Reserve Bank of Dallas poll, US oil and gas activity stagnated in the first quarter as output gains slowed and drillers’ outlooks turned negative.
The bank’s activity index fell to 2.1 from 30.3 in the fourth quarter of 2022. It gauges conditions among oil and gas companies in Texas, New Mexico, and Louisiana, the primary oil production regions
Markets were also waiting for clarification on the banking problem and the US Federal Reserve’s rate hike plans. The failure of two US lenders and the rescue of Credit Suisse on March 20 caused investors to flee the market, sending oil prices to a 15-month low.
The dollar’s recent declines were halted as it edged lower against most of its main peers. Oil consumption is negatively impacted by a stronger dollar as buyers with foreign currencies must pay more for crude.