WTI Crude Oil Prices Remain Flat as Stronger Dollar Offsets Drop in Iraqi Kurdistan Oil Exports

Key Takeaways

• Stronger dollar limits gains despite drop in Iraqi Kurdistan oil exports
• Unexpected drop in U.S. crude oil stockpiles limits price declines
• Russian crude oil production falls less than targeted cuts, indicating bullish sentiment

Overview

U.S. West Texas Intermediate crude oil prices are flat on Thursday mostly due to a stronger dollar, which makes dollar-denominated commodities less-appealing to foreign traders.

At 06:30 GMT, June WTI crude oil is trading $73.23, up $0.11 or +0.15%. On Wednesday, the United States Oil Fund ETF (USO) settled at $64.16, down $0.39 or -0.60%

Gains are being capped despite the reduction of Iraqi Kurdistan’s oil exports. However, analysts noted that notwithstanding the decline, oil prices have been rangebound since the beginning of 2023.

Iraqi Kurdistan Oil Production Falls

Kurdistan-Iraq premium in oil prices could disappear sooner than expected due to changes in the country’s domestic politics.

Russian crude production fell 300,000 barrels per day in the first three weeks of March, less than targeted cuts of 500,000 bpd.

The statement about the Kurdistan-Iraq premium suggests a bearish sentiment towards oil prices, as the disappearance of the premium could lead to lower oil prices.

On the other hand, the fact that Russian crude production fell less than the targeted cuts indicates a bullish sentiment towards oil prices, as it suggests that there may be a tighter supply of crude oil than previously expected.

Unexpected Drop in US Crude Oil Stockpiles Limits Losses

An unexpected drop in U.S. crude oil stockpiles limited price declines, with imports decreasing to a two-year low based on the U.S. Energy Information Administration (EIA).

Crude inventories dropped by 7.5 million barrels to 473.7 million barrels in the week ending on March 24, which was contrary to analysts’ expectations in a Reuters poll that predicted a rise of 100,000 barrels.

However, gasoline stocks fell by 2.9 million barrels to 226.7 million barrels, compared to analysts’ anticipated drop of 1.6 million barrels.

As the demand strengthens seasonally by the end of Q2, oil prices are expected to rise from their current levels.

Daily June WTI Crude Oil Technical Analysis

The main trend is down according to the daily swing chart. However, momentum is trending higher. A trade through $64.58 will signal a resumption of the downtrend. A move through $80.97 will change the main trend to up.

The minor trend is up. This is controlling the momentum. A trade through $67.02 will change the minor trend to down.

The main range is $80.97 to $64.58. The market is currently testing its retracement zone at $72.78 – $74.71. The long-term resistance zone is $75.49 – $78.06. Combing these two zones creates a resistance cluster at $74.71 – $75.49.

Daily June WTI Crude Oil Technical Forecast

Trader reaction to the 50% level at $72.78 is likely to determine the direction of the June WTI crude oil futures contract on Thursday.

Bullish Scenario

A sustained move over $72.78 will indicate the presence of buyers. This could trigger a surge into $74.71 – $75.59. The latter is a potential trigger point for an acceleration to the upside.

Bearish Scenario

A sustained move under $72.78 will signal the presence of sellers. This could trigger a sharp break into a minor pivot at $69.53, followed by $68.76.