Oil Prices Dip As Turkey, Inventory News Rekindle Trader Concerns

But optimism over China's reopening continues to underscore sentiment: Oil Image/Pixabay

Crude trading on Thursday swung back to its more normal pattern of incurring  price losses, this time due to the disclosure that Turkey's earthquake earlier this week did not seriously damage oil infrastructure, and combined with news of a U.S. crude inventory build.

However, both Brent and West Texas Intermediate have gained more than 5 percent so far this week.

Brent on Thursday settled down 59 cents at $84.50 per barrel, while WTI settled down 41 cents at $78.06 per barrel.

The Energy Information Administration reported that U.S. crude stocks rose last week to 455.1 million barrels, their highest since June 2021, and gasoline and distillate inventories also climbed due to an unseasonably mild winter.

As for the news of Turkey's resilient oil infrastructure, John Kilduff, founding partner at Again Capital, remarked, "We won't be losing that supply for as long as we thought."

Regarding the roller coaster nature of crude trading overall of late, Rebecca Babin, a senior energy trader at CIBC Private Wealth, remarked, "The push-pull has been ongoing since the start of the year, leaving the commodity having trouble breaking out of its range….positioning looks set up long, so data will be the driver of moves to the upside."

But even though the prospect of demand slowdowns due to headwinds in a global economy once again gave crude traders pause on Thursday, the commodity was said to be somewhat supported by the enduring excitement over China reopening after abandoning its zero Covid policy and draconian lockdowns.

ANZ bank analysts wrote in a note, "We expect Chinese oil consumption to increase by around 1 million barrels per day [bpd] this year, with strong growth emerging as early as late in Q1; overall, this should push global demand up by 2.1 million bpd in 2023."

Finally on Thursday, Jamie Dimon, chief executive at JPMorgan Chase & Co., told Reuters that analysts should be careful about sentiments that suggest a victory over inflation; Dimon said there was still the potential for the Federal Reserve to raise interest rates above the 5 percent mark.