Oil prices edged lower on Tuesday, influenced by several factors including the anticipation of increased supply from Russia, sluggish downstream demand particularly in sectors like jet fuel, and cautious trading ahead of the Federal Reserve’s decision on U.S. interest rates.
As of 0433 GMT, the Brent crude oil futures contract for May delivery slipped 15 cents to $86.74 a barrel, while U.S. West Texas Intermediate (WTI) prices fell 14 cents to $82.02. The WTI April contract, set to expire tomorrow, dropped 15 cents to $82.57. Despite the slight decline, both benchmarks had reached four-month highs in the previous session.
The recent surge in oil prices was underpinned by factors such as reduced crude exports from Saudi Arabia and Iraq, coupled with signs of stronger demand and economic growth in major consumer markets like China and the U.S.
However, concerns regarding increased supply from Russia dampened market sentiment. The country’s oil infrastructure has been targeted by attacks from Ukraine, leading to fears of disruptions in Russian crude runs. Analysts from JP Morgan noted in a client note that these attacks could reduce Russian crude runs by up to 300 thousand barrels per day, in addition to scheduled maintenance closures. Despite lower primary runs, Russia is expected to increase crude oil exports through its western ports by almost 200,000 barrels per day in March, helping the country maintain output cuts while keeping exports flat.
The cautious trading atmosphere ahead of the Federal Reserve’s decision on U.S. interest rates also contributed to the downward pressure on oil prices. Investors are closely monitoring the Fed’s decision, which could have significant implications for global financial markets.
Overall, oil market dynamics remain influenced by a delicate balance between supply concerns and demand outlook, with geopolitical tensions and macroeconomic factors continuing to shape price movements in the near term.
