Oil Dips As Stockpiles Rise, But Bullish Prospects Remain Intact

Meanwhile, Russia boosts exploration for oil, gas, and minerals: File Image/Pixabay

A stronger U.S. dollar and concerns about weaker demand caused oil prices to fall on Wednesday, but fundamentals – and bullish indicators – moving forward remained intact.

Oil's decline, it second in as many sessions, was minimal: Brent settled down 16 cents at $86.09 per barrel, while West Texas Intermediate settled down 27 cents to $81.35.

The American Petroleum Institute announced a surprise increase of 9.33 million barrels of U.S. crude inventories compared to expectations for a 700,000 barrel draw.

The Energy Information Administration also reported a 1.3 million barrel increase of gasoline stocks last week, and implied weekly demand was below 9 million barrels per day for the second week in a row.

Additionally, the rise of the U.S. dollar by 0.11 percent against other currencies aided the decline in prices by making oil more expensive for foreign currency users.

John Evans, an analyst at PVM, took Wednesday's trading in stride by noting, "Given an approaching end of month, end of quarter and the long Easter weekend, it is understandable that a little froth comes off the markets."

Other pundits seemed reasonably upbeat about future prospects: JPMorgan Chase & Co. said Wednesday that crude could hit $100 per barrel if Russia's recent decision to cut output isn't balanced by other measures.

In other oil news on Wednesday, Russia's Federal Agency for Mineral Resources disclosed that the former Soviet Union is boosting exploration for oil, gas, and minerals on its continental shelf by launching the first comprehensive geological and drilling studies in 30 years.

Yevgeny Petrov, head of the agency, told media, "we have taken a systemic approach to shelf exploration, begun working on the shelf, and drilled four wells; these are truly significant geological results."

He added, "Despite the foreign media claims about stagnation in our mining and geological prospecting sector, I can say that the sector is growing steadily and there is no decline in funding, first and foremost by mineral developers."