Crude markets began steady, settling little changed on the day as global equities began to recoup some losses from their biggest one-week decline in two years.
Brent crude LCOc1 futures slipped 20 cents, or 0.3 percent, to settle at $62.59. U.S. West Texas Intermediate crude CLc1 rose 9 cents to settle at $59.29 a barrel, up 0.2 percent but off the session high of $60.83.
The market tried to pick its head up said Gene McGillian, director of market research at Tradition Energy in Stamford, Connecticut. “It was related to the weakness in the dollar.”
A weaker dollar helped to support oil by making dollar-priced crude cheaper for holders of other currencies. Crude also got a boost as traders who had unwound long positions looked to regain some long footing, said John Macaluso, analyst at Tyche Capital Advisors.
Crude prices rose early, then pared gains on concerns that surging U.S. production would outstrip output cuts from the Organization of the Petroleum Exporting Countries (OPEC), McGillian said.
U.S. crude production from major shale formations is expected to rise in March by 111,000 barrels per day from the previous month to 6.76 million bpd, the U.S. Energy Information Administration (EIA) said in a monthly report.
The EIA expects that U.S. crude output may rise to 11 million bpd by the end of the year.
The market is likely to be driven by technical factors before fundamental inventory data from the U.S. Energy Information Administration kicks in later in the week, Macaluso said.
“We’re two days away from EIA numbers, where we’re probably going to see another build,” he said.
Analysts noted that oil consumption remains robust.
“Demand growth is very strong and, with (output) declines in places like Venezuela, is helping the situation. If demand stays strong, it still looks like OPEC will be in control in 2019,” said SEB chief commodities strategist Bjarne Schieldrop.
PVM Oil Associates strategist Stephen Brennock cited “China’s ravenous thirst for oil, which saw it surpass the U.S. to become the world’s largest crude importer in 2017.”
U.S. energy companies added 26 oil rigs in the latest week, boosting the count to 791, the highest since April 2015, energy services company Baker Hughes said.
“We stick to our bearish view and see more downside for oil prices. The U.S. shale boom shows strong momentum and U.S. inventory levels are set to increase seasonally over the coming weeks as refineries go into maintenance, which should challenge the still-prevalent market tightening narrative at least temporarily,” Julius Baer head of macro and commodity research Norbert Ruecker said in a note.