Oil prices gain ground as US oversupply concerns subside

Oil prices rose in European trade on Thursday after a short hiatus from gains, almost hitting two-week highs as concerns about US oversupplies fade. 

Recent data showed a spike in US crude stocks last week, while US output slowed down as well.

Prices are also boosted by a tumble in dollar's standing against major rivals after weak US data.

Global Prices

US crude rose 1.25% to $73.82 a barrel, while Brent added 1.2% to $78.34 a barrel. 

US crude lost 1.05% on Wednesday on active profit-taking away from two-week highs at $74.32. 

Brent fell 1.1% after a two-day wave of gains that sent prices to March 14 highs at $78.96. 

US Stocks

The Energy Information Administration announced a drawdown of 7.5 million barrels in the week ending March 24, while analysts expected a buildup of 1.8 million barrels. 

It's the largest inventory drawdown in 2023 in a sign of improving US demand on fuel. 

US Output

The EIA also announced a drop in US crude production by 100 thousand bpd last week to a total of 12.2 million barrels. 

The Dollar

The dollar index fell 0.5% on Thursday to one-week lows at 102.12, against a basket of major rivals, underpinning dollar-denominated commodities. 

The decline came after weak US data showed weak US growth while unemployment claims rose estimates. 

Such data hurt pricing for a 0.25% rate hike by the Federal Reserve in May. 

Kurdish Supplies

Turkey stopped the Kurdistan Region from pumping crude through its oil pipeline after a court order than required the approval of the Iraqi government to ship the oil.

Such legal conflicts in Iraq between the federal government and Kurdistan led to a cut of 450 thousand bpd in crude exports.

Barkley's expects an increase of $3 a barrel in crude stocks from its $92 projections for Brent in 2023 with a long-term disruption in Kurdish exports.