Singapore — 0248 GMT: Crude oil futures fell during the mid-morning trade in Asia March 16, as the market sentiment was knocked by a trifecta of rising COVID-19 cases, supply-side worries and strengthening dollar.
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Register NowAt 10:48 am Singapore time (0248 GMT), the ICE Brent May contract was down 83 cents/b (1.20%) from the March 15 settle to $68.05/b, while the April NYMEX light sweet crude contract was down by 76 cents/b (1.16%) to $64.63/b.
Analysts said the oil market has entered a period of consolidation following a rally that has seen both the ICE Brent and the NYMEX light sweet crude markers jump more than 30%.
"It looks like the bullish crude moves that stemmed from the Texas deep freeze and the reopening of the economy are now fully priced in. Oil prices have been extremely bullish since November and now it seems that we could finally be entering a consolidation period," said Edward Moya, senior market analyst at OANDA, in a March 16 note.
Moya was among the analysts who noted that worrying developments on the pandemic front were also putting pressure on prices, as he said that rising infection numbers have been seen in US states such as New Jersey and Michigan.
Coronavirus-related fears simmered after reports emerged that several European countries, contrary to advice by the World Health Organization, are pausing the use of the Oxford-AstraZeneca vaccine over concerns that the vaccine may cause blood clots. The decision has added doubts over whether the region can recover from the pandemic.
Investors are also keeping a close watch on oil supply, with ANZ analysts saying in a March 16 note that both Iranian exports and US shale supply are on an uptrend.
"The number of crews working wells jumped 10% last week as the US shale industry recovered from the arctic blast that shut the industry," they said. "Traders are also concerned about rising Iranian exports [as] China has been buying increasing amounts of [Iran's] oil."
Meanwhile, the US dollar continued to strengthen, putting further pressure on oil prices. At 10:39 am, the June contract for the US dollar index was up 0.227% from the previous close at 91.885.
"A stronger dollar should start to weigh on commodities and that should prevent oil prices from rallying too much," said Moya.
In inventory data, commercial US crude stocks are expected to have increased 400,000 barrels to around 498.8 million barrels in the week ended March 12, analysts surveyed by S&P Global Platts said. The counter-seasonal build would leave stocks 6.5% above the five-year average of US Energy Information Administration data, opening the widest surplus since early January.
The weekly inventory reports from the American Petroleum Institute and the EIA are due to be released March 16 and March 17, respectively.
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