Oil prices experienced a slight decline on Wednesday, influenced by a stronger dollar and profit-taking activities following recent multi-month highs. Brent crude futures for May delivery dipped by 16 cents, equivalent to 0.2%, settling at $87.22 per barrel by 0407 GMT. Meanwhile, U.S. West Texas Intermediate (WTI) futures for April delivery, set to expire on Wednesday’s settlement, decreased by 31 cents, or 0.4%, reaching $83.16 per barrel. The more active May WTI contract also saw a drop, down 18 cents to $82.55 a barrel.
According to Auckland-based independent analyst Tina Teng, the downward movement in prices could be attributed to profit-taking, with traders capitalizing on recent gains. The recent rally in prices has been supported by an improving demand outlook and signs of supply reduction.
Asian buyer sentiment was further impacted by the strengthening U.S. dollar index, which rose for the fifth consecutive session. This increase came after recent data indicated a resilient U.S. economy. A stronger dollar typically makes oil more expensive for investors holding other currencies, consequently dampening demand.
Traders were also focused on the Federal Reserve’s interest rate announcement scheduled for later on Wednesday. The market awaited signals regarding the Fed’s rate path for the remainder of the year, which could further influence oil prices.
In the previous session, both Brent and WTI settled at their highest levels since late October. Despite Wednesday’s slight dip, market observers remain attentive to various factors shaping the trajectory of oil prices in the near term.
