New York — Crude oil futures settled lower for a second straight session March 9 as the market looked to the US inventory report March 10 for next direction.
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NYMEX April WTI declined $1.04 to $64.01/b, and ICE May Brent finished lower 72 cents at $67.52/b.
"The bullish rally with WTI crude appears to be running out of gas, but it seems unlikely a major pullback will occur unless a major disruption to the US reopening of the economy occurs," OANDA senior market analyst Edward Moya said in a note. "It has been a while since crude prices slumped alongside a weaker dollar, so today's choppy trade could reflect hesitancy to have a big position before the EIA weekly crude oil inventory report."
The ICE US dollar index fell below 92 in afternoon trading, retreating from a three-and-half month high of 92.334 on March 8.
The widespread impact of February's severe winter weather across all aspects of the US Gulf Coast crude supply chain has added considerable uncertainty to the weekly inventory report.
US commercial crude stocks are expected to have increased 2.7 million barrels to around 487.3 million barrels in the week ended March 5, according to analysts surveyed by S&P Global Platts. But a recent Reuters poll pointed to a decline in US inventories last week, according to media reports.
US crude production averaged 10.4 million b/d in February, down 500,000 b/d from January output, the US Energy Information Administration said in its monthly Short-Term Energy Outlook released March 9, due in large part to winter-storm related shut ins. The severe weather is likely to lead to aggregate crude production losses of 20-25 million barrels, according to S&P Global Platts Analytics.
NYMEX April RBOB settled 15 points higher at $2.0502/gal, while April ULSD finished 12 points lower at $1.9073/gal.
Divergent RBOB and crude futures drove gasoline cracks to more than three-year highs.
The ICE New York Harbor front month RBOB crack versus Brent rallied to around $18.39/b in afternoon trading, on pace for the highest close since Aug. 31, 2017.
EIA revises crude prices higher
The EIA now expects Brent crude prices to average around $60.67/b in 2021, up $7.47/b from its February forecast, and at $58.51/b in 2022, and the WTI spot price to average around $57.24/b in 2021, up $7.03/b from its most recent report, and at $54.75/b in 2022.
The upward revision stems from tightened supply outlooks during the first half of the year after the OPEC+ group unexpectedly extended the bulk of their output cuts through April at the March 4 meeting.
The EIA expects the OPEC+ quota extension to push Brent prices to around $65-$70/b during March and April, up more than $10/b from its previous month forecast, but prices will fall back to around $58/b for the back half of the year as rising supply slows global inventory draws.