Oil futures: Crude steady amid Iraq disruption, US inventory draws

29 Mar 2023

Quantum Commodity Intelligence – Crude oil futures Wednesday were largely consolidating the week’s gains with Iraqi oil flows via Turkey yet to resume, while prices were also underpinned by the latest US inventory data.

May ICE Brent futures were trading at $78.50/b (1700 GMT), compared to Tuesday’s settle of $78.65/b, while the more-liquid Jun23 contract was trading $77.88/b.

At the same time May23 NYMEX WTI was trading $73.38/b, versus Tuesday’s settle of $73.20/b. 

“The (week's) rally was further supported by a halt to exports from Iraq’s Kurdistan region which knocked around 450,000 barrels per day offline. There’s no timeline for an agreement to be reached to restart flows and the tighter the oil market becomes, the greater the loss it will be,” said Craig Erlam, senior market analyst at OANDA, noting the improved outlook on the banking crisis so far this week.

Talks were continuing for a third day Wednesday between Baghdad and officials from the Kurdistan Regional Government (KRG) in a bid to avoid major field closures, as limited storage availability quickly fills up.  

At least one production company, Norway’s DNO, was reported Wednesday to be in the process of precautionary shutdowns as storage tanks reached near capacity.

At stake is around 450,000 bpd of Kirkuk crude, which was halted over the weekend after Baghdad won a landmark international court decision, ruling Turkey had violated a bilateral treaty by facilitating independent pipeline flows from Kurdistan.

Late Tuesday, US National Security Council spokesman John Kirby said: “We’ve urged the governments of Turkey and Iraq to resume the flow of oil through the Iraq-Turkey pipeline.”


Oil prices were also given a lift after American Petroleum Institute data released late Tuesday revealed an unexpected sharp fall in US commercial crude inventories of 6 million barrels last week.

“Providing further support to the oil market overnight was bullish inventory data from the API. US crude oil inventories are reported to have fallen by 6.1 million barrels over the last week - quite different from the small build the market was expecting" said Warren Patterson, head of ING's commodity research, adding crude oil inventories at the Cushing storage hub and NYMEX delivery point also declined by 2.4 million barrels.

API data also showed gasoline tumbled by 5.9 million barrels, while distillate stocks posted a small 0.54 million barrel build.

Data from the Energy Information Administration released Wednesday showed a similar fall with government figures showing a near 7.5 million bpd drop in crude.

Further positive demand news came from the airline sector this week, as global capacity exceeded the 100 million-mark this week for the first time since last September according to travel data company OAG, as international bookings surged over the pre-Easter travel period.