Oil Down As White House Comments Dash Bullish Trading Sentiments

But China's economic recovery continues to support long term optimism: File Image/Pixabay

The U.S. energy secretary musing that refilling her country's Strategic Petroleum Reserve (SPR) may take several years dealt a blow to oil traders' growing bullishness on Thursday, the outcome being that crude prices settled 1 percent lower.

This was despite the dollar index trading at its lowest since Feb. 3, following the Federal Reserve suggesting it might pause interest rate hikes.

Brent fell by 78 cents, or 1 percent, to settle at $75.91 per barrel, while West Texas Intermediate dipped by 94 cents, or 1.3 percent, to $69.96 per barrel.

Energy secretary Jennifer Granholm told lawmakers in a congressional hearing, "This year, it will be difficult for us to take advantage of this low price, but we will continue to look for that low price into the future because we intend to be able to save the taxpayer dollars."

She added that the White House wants to buy oil back at under $72 per barrel, and that sale and maintenance at two of the reserve's four sites will make it difficult to buy back oil this year.

Still, the crude market on Thursday offered bullish signs: RBOB gasoline futures reached a 10-day high following the Energy Information Administration reporting that stockpiles of the commodity fell last week by the most since September 2021.

Also, oil demand in China, the world's biggest oil importer, reportedly topped 16 million barrels per day (bpd) in the wake of that country abandoning the zero tolerance Covid policies that all but ground its economy to a complete halt.

All this compelled Robert Yawger, managing director, energy futures strategist at Mizuho, to state,  "the gasoline situation is looking a bit tight here."

Rob Haworth, senior investment strategist at U.S. Bank Wealth Management, added with regard to China, "Traffic is up, we're seeing transit up, but it's not all the way back to pre-pandemic levels — that's taking time to build.

"If you think back to the U.S. reopening, we reopened and there was a flood of activity, and then everyone pulled back because of infections and concerns."