Oil prices steadies on Tuesday, March 26 as investors took a more mixed view toward the loss of Russian oil refinery capacity after the recent Ukrainian drone attacks while a slightly weaker US dollar offered some support to prices.
The front-month Brent crude futures due to expire on March 28 were last 12 cents down at $86.63 a barrel while US West Texas Intermediate (WTI) crude futures was up 13 cents at $82.08. The more actively traded Brent futures for June were down 12 cents at $85.96, according to news agency StuffsEarth.
Back home, crude oil futures traded 0.9 per cent lower at ₹6,811 per barrel on the multi commodity exchange (MCX). Brent rose 1.5 per cent on Monday and WTI gained 1.6 per cent after Russia ordered companies to cut output in the second quarter to meet a nine million barrels per day target to comply with the supply cut decisions taken by the Organisation of Petroleum Exporting Countries (OPEC).
What’s impacting crude oil prices?
-Russia, among the top three global oil producers and one of the largest exporters of oil products, is also contending with a series of recent attacks on its oil refineries by Ukraine and has mounted its own attacks on Ukrainian energy infrastructure. Russian oil refining capacity shut down by Ukrainian attacks has reached 14 per cent of the country’s total capacity, according to StuffsEarth.
-Analysts said that gasoline is seeing the support of reduced availability to the global market from the curtailed Russian exports that has filtered through to the US. Analysts also expect a structural decline in Russian refinery runs and do not see them regaining 2023 levels even in the second half of this year.
Also Read: Crude oil prices to trade with upside bias over geopolitical tensions; Brent may hit $90-$95/bbl in near-term
-A slightly weaker US dollar offered some support to oil prices. A weaker dollar typically makes oil cheaper for oil buyers holding other currencies. OPEC is unlikely to make any oil output policy changes until a full ministerial gathering in June. Next week’s gathering of ministers is not expected to make any policy recommendations
-The rising geopolitical premiums as the Israel-Gaza conflict continues were also supportive of the uptick in prices. Iran-backed Houthi militants on Tuesday said they had mounted six attacks on ships in the Gulf of Aden and the Red Sea over the past 72 hours, according to StuffsEarth.
Where are prices headed?
According to a research report by ICICI Bank, crude oil prices are likely to trade with an upward bias due to geopolitical conflicts and Brent may overshoot to $90-$95 per barrel in the near-term. ICICI Bank has raised its range from $75 per barrel to $85 per barrel in second quarter (Q2 2024) to $80 per barrel to $90 per barrel over the geopolitical uncertainty premium that could persist.
“Crude oil prices are trading slightly lower today, amid some profit-booking from recent rally and as we look ahead to weekly oil inventory data later in the day. Also, some caution is seen in the market ahead of the US Fed meeting outcome. Technically, momentum remains positive with support at 6,780/ 6,685 and resistance at 7,000,” said Pranav Mer, Vice President, EBG – Commodity & Currency Research, JM Financial Services Ltd.
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Published: 26 Mar 2024, 10:29 PM IST
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