Crude oil futures trade mixed on stronger dollar, bearish API data

Crude oil futures were mixed during midafternoon Asia trade April 6 as investors continued to factor in supply pressures from possible further sanctions on Russian energy exports, while a stronger dollar and a surprise build in US stockpiles kept gains in check.

At 3:26 pm Singapore time (0726 GMT), the ICE June Brent futures contract edged up 19 cents/b (0.18%) from the previous close at $106.83/b while the NYMEX May light sweet crude contract slipped 6 cents/b (0.06%) at $101.90/b.

"Despite the back and forth markets, oil is range trading this week. The extent of the new Russian sanctions to be announced by Europe and the US today will have a more immediate impact on short term direction," said OANDA Asia Pacific Senior Market Analyst Jeffrey Halley, adding, "It is my base case is that Europe will leave Russian oil alone for now, although if they surprise and target this sector, prices should move sharply higher."

"In the meantime, China's growth concerns seem to be tempering gains in oil markets," Halley said.

European Commission President Ursula von der Leyen said April 5 that the EU is proposing to ban most Russian ships and trucks from entering the bloc, according to media reports. Leyen has said the EU will go forward with a debate on expanding its sanctions targeting Russian oil, which has met opposition due to the continent's high dependency on Russian energy imports.

Participants will be keeping a close watch on related developments as the Biden administration, together with members of the G-7, are expected to join the EU in imposing additional sanctions on Russian financial institutions.

Meanwhile, investors have weighed the impact of a stronger dollar, which is seen to be exerting pressure on crude prices. A stronger dollar usually points to weaker commodity prices as many commodities, such as crude oil, are priced against the dollar, making procurement expensive for holders of other currencies.

"A stronger dollar boosted by news of FED tightening monetary policy makes holding crude oil more expensive for traders in other currencies," said Avtar Sandu, senior manager commodities at Phillip Futures, in a note.

As of 0726 GMT, the dollar index was up 0.67% at 99.66.

Separately, the American Petroleum Institute estimated April 5 a surprise US crude oil inventory build of 1.08 million barrels for the week ended April 1. Analysts were expecting crude stocks to have fallen 2.88 million barrels for the same period.

Distillate stocks climbed 593,000 barrels in the week, while gasoline stocks fell 543,000 barrels, the API data showed.

Market watchers will be seeking further guidance on stockpiles from the US Energy Information Administration report, due out late-April 6.