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OPEC flags downside risk to summer oil demand
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Oil declines limited by US dollar hitting 1-year low
versus euro
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China's crude oil imports surge to highest since June 2020
(Adds analyst comment; updates with settlement prices)
By Shariq Khan
BENGALURU, April 13 (Reuters) - Oil prices fell a dollar
a barrel on Thursday, as an OPEC report stoked summer demand
worries and traders took profits after benchmarks scaled
multi-month highs in the previous session.
Brent crude fell $1.24, or 1.4%, to settle at $86.09
a barrel, only the second time this month that the global
benchmark has finished lower. The U.S. West Texas Intermediate
(WTI) slipped $1.10, or 1.3%, to close at $82.16 a
barrel.
Both benchmarks had gained 2% on Wednesday to their highest
in more than a month, as cooling U.S. inflation spurred hopes
that the U.S. Federal Reserve will stop raising interest rates.
The Organization of the Petroleum Exporting Countries (OPEC)
flagged downside risks to summer oil demand in a monthly report
on Thursday, highlighting rising inventories and challenges to
global growth.
The report shed light on the reasons behind a surprise
production cut announced by OPEC+, which includes Russia and
other OPEC allies, at the start of this month.
"Generally I would say we saw builds in oil inventories this
week in those countries which publish stocks data, so maybe that
is what has been a realization that the market hasn't shifted
into a deficit," UBS analyst Giovanni Staunovo said.
Despite Thursday's declines, the OPEC+ decision has pushed
Brent futures up nearly 8% so far this month, and it continues
to raise expectations of potential future tightness in the oil
markets.
Oil price declines were also limited as OPEC kept its
forecast for global oil demand growth in 2023 unchanged. Other
economic indicators lent further support.
The U.S. dollar index fell to a two-month low on
Thursday after producer prices unexpectedly declined in March,
boosting expectations that the Federal Reserve is near the end
of its interest rate hiking cycle.
A weaker greenback makes dollar-denominated oil cheaper for
investors holding other currencies, lifting demand.
"With the dollar at its weakest in a year versus the euro, that formula kicks in with an exclamation mark," said Mizuho analyst Robert Yawger. Signs of a demand recovery in China, the top importer of crude oil and products, provided more support for oil prices, Yawger said. China's crude oil imports in March surged 22.5% from a year earlier to the highest since June 2020, data showed on Thursday. (Reporting by Shariq Khan; Additional reporting by Rowena Edwards, Yuka Obayashi and Jeslyn Lerh; Editing by David Goodman, Will Dunham, Jane Merriman, Mark Heinrich and Mike Harrison)
