Crude oil back in the red ahead of US data release

Oil prices slipped yet again in Asian trading on Wednesday ahead of a stockpile data release which could point to a rise in US supply.

At 08:15 on Wednesday, Brent front month futures contract was down 0.33% or 18 cents to $54.93 per barrel, while the WTI was down 40 cents or 0.84% at $47.11.

Market analysts expect the US Energy Information Administration (EIA) to publish an increase in supply for the week ending March 20. Inventories have risen for the past nine successive EIA surveys.

It would follow Saudi Arabia’s comments on Monday that the OPEC heavyweight oil producing nation is unwilling to cut production. Additionally, Kuwait’s oil minister also said the country had “little choice” but to maintain its production levels. OPEC’s collective daily output is just above 30 million barrels per day.

Bearish sentiment is also finding support from a relatively stronger dollar and lacklustre economic data from China. On Tuesday, HSBC said economic activity was worsening in China, while earlier in the weak Morgan Stanley cut its forecasts for a basket of commodities including crude oil, base metals and iron ore.

Kit Juckes, global FX strategist at Societe Generale, said the mood is risk-friendly and long dollar or short emerging markets (EM) / commodity trades are still being stopped out.

“For FX line-drawers, we are at interesting levels to think about buying the dollar but the newsflow doesn't do much to support a bounce yet. If the dollar rallies, equities stutter, EM falls over and commodity prices fall back from here, with no new news, it'll be a victory for 'technicals',” he concluded.