Oil retreated after testing a key technical level but was still near a five-month high as falling US inventories and rising Chinese imports added to signs of a tough global market.
Fundamentals support the recent rally in crude oil as inventories declined again last week at the key US storage hub in Cushing, Okla., while weaker Russian oil exports and disrupted flows from Kurdistan Iraqis are holding back supplies.
The US benchmark edged closer to its 200-day moving average after two days of solid gains, but prices failed to break a technical level on Thursday. Crossing this mark would be a bullish indicator with the potential to stimulate additional buying. If the 200-day moving average holds as resistance, prices could retreat to around $76 a barrel, a level last seen before the surprise OPEC+ production cuts, TACenergy said in a note .
Also being closely watched are a slew of reports projecting market supply and demand projections released this week. The Organization of the Petroleum Exporting Countries report predicts that markets will be deeply underserved this year. Instead, the US Energy Information Administration forecast that supplies will exceed demand in both 2023 and 2024. The third major report of the week, from the International Energy Agency, will be released on Friday.
Crude has recovered more than 20% since hitting a 15-month low in March. In the latest sign that demand from China is picking up, the biggest crude importer shipped the most oil in nearly three years in March. Last week’s surprise announcement of the OPEC+ production cut pushed prices up by the most in a year, punishing speculators who had bet on falling oil prices.
Prices:
- WTI for May delivery fell $1.10 to settle at $82.16 a barrel in New York.
- Brent for June settlement was down $1.24 at $86.09 a barrel.
