Oil Prices Take a Breather After Reaching Multi-Month Highs

Published on: Mar 20, 2024|2 min read

Share On

London: 20 March 2024 (TraderMade): Crude oil prices pulled back slightly on Wednesday after a strong rally that pushed them to their highest levels since late October. The decline comes amid a mix of factors, including investor profit-taking and a strengthening US dollar.

Key Takeaways

Oil prices edged lower on Wednesday after rallying to multi-month highs.
Profit-taking and a stronger dollar are weighing on prices.
The upcoming Fed decision is also a focus for oil traders.

Profit Taking After Rally

Oil prices had surged in recent days on concerns about supply disruptions due to the war in Ukraine, including drone attacks on Russian refineries. However, some investors are now taking profits after the recent gains.

Brent Crude (UKOIL) Trajectory

Brent Crude (UKOIL) prices saw a modest increase over the last week. Here's a quick breakdown:

Start: $83.565 on 13 March, 2024
End: $86.158 on 20 March, 2024
Weekly Change: +$2.593 (around 3.1%)
Trajectory: Prices showed a gradual upward trend throughout the week, with some minor fluctuations.

Overall, Brent Crude prices experienced a positive week with a slight increase and a dip to conclude.

Brent Crude (UKOIL) Chart

WTI Crude (OIL) Trajectory

WTI Crude (OIL) prices climbed over the last week, closing higher despite some intraweek volatility. Here's a breakdown:

Start: $79.21899 on 13 March, 2024
End: $81.95399 on 20 March, 2024
Weekly Change: +$2.73499 (around 3.5%)
Trajectory: Prices showed a general upward trend, with some fluctuations. There was a notable increase mid-week, followed by a slight pullback on the last day.

Overall, WTI Crude prices experienced a positive week with a moderate gain, and took a breather after a strong rally.

WTI Crude (OIL) Chart

Stronger Dollar Dampens Demand

Crude oil's weakening global demand may be due to the strengthening US Dollar. The dollar index has climbed higher for a fifth consecutive session.

Focus on Fed Decision

Market participants are also awaiting the Federal Reserve's interest rate decision later on Wednesday. A hike could further strengthen the dollar and put downward pressure on oil prices.

Summary

While concerns about supply disruptions remain supportive of oil prices, profit-taking and a rising dollar are causing a temporary pullback. The direction of oil prices in the near term may rely on the outcome of the Fed meeting and the broader market sentiment.

_{Image by Kerfin 7 on Freepik}