Oil prices were broadly steady on March 21, shored up by a surprise U.S. crude stock drop and the U.S. Federal Reserve sticking to its outlook on rate cuts for the year.
Brent crude futures LCOc1 for May were down $0.17, or 0.2%, to $85.78/bbl by 1359 GMT. They fell by 1.6% on March 20.
WTI futures for May were down $0.20, or 0.3%, to $81.07/bbl after a fall of about 1.8% in the previous session.
Crude inventories in the U.S., the world's biggest oil consumer, fell for a second week, the U.S. Energy Information Administration (EIA) reported on March 20.
Stockpiles unexpectedly declined by 2 MMbbl to 445 MMbbl in the week ended March 15, as exports rose and refiners continued to increase activity. Analysts polled by Reuters had expected a 13,000 bbl rise.
"It seems that the bullish mantra is still intact, with yet another unexpected drawdown in U.S. crude inventories last week while market participants continue to price for the risks of further supply disruption on the Russia-Ukraine front, said Yeap Jun Rong, market strategist at IG.
Gasoline inventories fell for a seventh week, down 3.3 MMbbl to 230.8 MMbl, suggesting steady strong fuel demand. Oil refinery runs ramped up by 127,000 bbl/d and utilization rates rose.
Investors also took heart from the U.S. central bank, which held interest rates in a range of 5.25% to 5.50% on March 20, but kept to an outlook for three rate cuts this year.
Lower rates could boost economic growth, in good news for oil sales.
U.S. business activity held steady in March, but prices increased across the board, suggesting that inflation could remain elevated after picking up at the start of the year.
Meanwhile, U.S. Labor Department data on March 21 showed the number of Americans filing new claims for unemployment benefits unexpectedly fell last week, suggesting that job growth remained strong in March.
Ukrainian attacks on Russian refineries also prompted investors to trade crude at higher prices, factoring in that the strikes could hit global petroleum supplies.
Ukrainian drones have targeted at least seven Russian refineries this month. The attacks have shut down 7%, or around 370,500 bbl/d, of Russian refining capacity, according to Reuters calculations.
Analysts say prolonged disruptions could force Russian producers to reduce supply if they are unable to export crude oil and face storage constraints.
Elsewhere, Germany's economy was likely in recession in first-quarter 2024 as weak consumption and anemic industrial demand continue to push the recovery further into the future, the central bank said in a regular economic report on Thursday.
Also on March 21, the Bank of England's governor said Britain's economy is "moving in the right direction" for the central bank to start cutting interest rates.
Recommended Reading
Tech Trends: Halliburton’s Carbon Capturing Cement Solution
2024-02-20 - Halliburton’s new CorrosaLock cement solution provides chemical resistance to CO2 and minimizes the impact of cyclic loading on the cement barrier.
NAPE: Chevron’s Chris Powers Talks Traditional Oil, Gas Role in CCUS
2024-02-12 - Policy, innovation and partnership are among the areas needed to help grow the emerging CCUS sector, a Chevron executive said.
Equinor Says EQT Asset Swap Upgrades International Portfolio
2024-04-30 - Equinor CFO Torgrim Reitan says the company’s recent U.S. asset swap with EQT Corp. was an example of the European company “high-grading” its international E&P portfolio.
Well Logging Could Get a Makeover
2024-02-27 - Aramco’s KASHF robot, expected to deploy in 2025, will be able to operate in both vertical and horizontal segments of wellbores.
Shell Brings Deepwater Rydberg Subsea Tieback Onstream
2024-02-23 - The two-well Gulf of Mexico development will send 16,000 boe/d at peak rates to the Appomattox production semisubmersible.