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Dollar dip boosts ANS
Greenback action and gasoline inventory drawdown overcome economy fears
Steve Sutherlin for Petroleum News
Alaska North Slope crude hastened its recovery as weakness in the U.S. dollar supported oil prices by making the dollar-denominated commodity more affordable for buyers using other currencies.
ANS leapt $1.29 March 12 to close at $73.52 per barrel, while West Texas Intermediate vaulted $1.43 to close at $67.68 and Brent leapt $1.39 to close at $70.95.
On March 12, the ICE U.S. Dollar Index -- a measure of the greenback against a basket of six major rivals -- was near its lowest level since October.
Dollar action added momentum to a subsidence of "risk off attitude" in financial markets following the latest inflation reading, according to Tariq Zahir, Tyche Capital Advisors managing member. The consumer price index rose by just 0.2% in February after running hot since November.
Future moves in oil are likely to be driven by tariff activity, worries about inflation, a slower economy, a possible soft job market and "on possible softening demand for energy markets," Zahir told MarketWatch March 12.
Oil prices were supported March 12 by a bullish surprise massive drawdown of finished gasoline inventories reported by the U.S. Energy Information Administration in its weekly petroleum data report released the same day.
U.S. gasoline inventories plummeted by 5.7 million barrels for the week ended March 7, to 241.1 million barrels -- 1% above the five-year average for the time of year, the EIA said.
Analysts, answering a survey by Platts S&P Global Commodity Insights, had forecast a gasoline supply drawdown of 1.6 million barrels.
Distillate fuel inventories notched a surprise decrease, down by 1.6 million barrels for the period to 117.6 million barrels -- 5% below the five-year average for the time of year, according to EIA data.
The Platts survey had forecast an increase of 180,000 barrels.
U.S. commercial crude oil inventories -- excluding Strategic Petroleum Reserve levels -- increased by 1.4 million barrels for the period to 435.2 million barrels, 5% below the five-year average for the time of year, the EIA said.
The Platts survey forecast the oil inventory data to show a build of 2 million barrels on average.
Crude gained additional support from EIA comments that it expects U.S. sanctions on Iran and the revocation of licenses for Venezuelan production to tighten near-term market balances significantly compared with previous expectations, Barron's reported.
March 12 gains built on the previous day's price increases. ANS rose 43 cents March 11 to close at $72.24, as WTI added 22 cents to close at $66.25 and Brent added 28 cents to close at $69.56.
Risk off sentiment hits markets Risk off sentiment was in high swing March 10, as ANS plunged $1.10 to close at $71.81, WTI plunged $1.01 to close at $66.03 and Brent plunged $1.08 to close at $69.28.
U.S. equities prices hit the skids also, staging the steepest selloff in months as investors fretted over increased tariffs on imports and souring consumer sentiment.
Over the weekend leading into March 10, President Trump said some financial pain might be necessary to attain U.S. foreign trade goals, and that a "period of transition" may be underway, while he declined to rule out the possibility of a U.S. recession.
Crude prices moved higher on March 7, after Russia Deputy Prime Minister Alexander Novak said on Friday that although the Organization of the Petroleum Exporting Countries and its allies agreed to start increasing oil production from April, the group could reverse the decision afterward if there are market imbalances, Reuters reported.
"We can always play in the other direction," Novak said.
In other bullish news, Kazakhstan -- which has frequently exceeded OPEC+ production quotas -- pledged to cut production in March, April and May, the Reuters report said.
ANS jumped $1.18 March 7 to close at $72.90, as WTI gained 68 cents to close at $67.04 and Brent added 90 cents to close at $70.36.
Bloomberg reported March 7 that U.S. Energy Secretary Chris Wright seeks up to $20 billion for President Trump's goal of refilling the Strategic Petroleum Reserve to peak capacity.
The initiative, which likely is a multi-year project, would restore holdings "just close to the top" to maintain efficient operating status, Wright said in a March 6 interview in Louisiana.
ANS leaps to premium over Brent In an extraordinary development March 6, ANS skyrocketed $2.77 higher to close at $71.72, flipping positions with Brent to trade at a $2.26 premium over the North Sea benchmark. Brent gained just 16 cents on the day to close at $69.46 and WTI added a nickel to close at $66.36.
ANS and Brent -- being seaborne crudes -- have access to a variety of markets and track each other more closely than either track WTI. Brent has enjoyed a positive differential over ANS since Oct. 4, except for Nov. 11 when ANS notched a 41-cent premium over Brent.
On March 12, ANS closed at a $2.57 premium to Brent and at a $5.84 premium over WTI.
From Wednesday to Wednesday, ANS surged $4.57 from its March 5 close of $68.95 to $73.52 March 12.
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