Oil rose above $70 a barrel for the first time in a week, boosted by bullish export data and a lack of surprises from the Federal Reserve.
Exports of crude and refined products rose to a record 12 million barrels a day, the Energy Information Administration said on Wednesday, suggesting a more upbeat outlook for demand. Meanwhile, the Fed offered its second consecutive rate hike of 25 basis points, matching expectations.
“The overreaction of risk assets is to the upside as the market anticipates that the end of the tightening cycle is near and cuts could occur,” said Daniel Ghali, commodities strategist at TD Securities.
Banking turmoil pushed crude to a 15-month low last week as traders’ risk appetite waned. Famed oil trader Pierre Andurand is among investors caught up in the declines, with losses in March helping to reduce his hedge fund by 40%. Still, Andurand and others remain bullish on crude’s outlook, in part because of China’s rebound from Covid lockdowns, with some forecasting prices of $140 a barrel by the end of the year.
A change in positioning also followed last week’s collapse, as money managers’ bullish bets on WTI fell to the lowest level since the coronavirus pandemic, according to the latest data from the Commerce Commission of commodity futures. That shift allows for “limited friction to the upside in crude as positioning got burned last week,” said Rebecca Babin, senior energy trader at CIBC Private Wealth.
Prices:
- WTI for May delivery gained $1.23 to settle at $70.90 a barrel.
- Brent for May settlement rose $1.37 to $76.69.
(with the assistance of Julia Fanzeres and Natalia Kniazhevich)
