(Bloomberg) — West Texas Intermediate fell about 2% to settle near $81, cooling a rally that had carried crude to the highest closing price since late October.
The pullback comes after prices were pushed into overbought territory and algorithms reached their maximum long positions. With the tailwind of the automated buying diminishing, momentum for crude may be poised to flip to the downside, said Daniel Ghali, a commodity strategist at TD Securities.
Meanwhile, traders parsed a US inventory report revealing decreasing gasoline stockpiles in the face of refinery outages in Russia. Additionally, implied demand for the motor fuel increased for a fifth straight week — still, the bullish refined products data wasn’t enough to counteract the market’s dour sentiment.
After starting 2024 in a tight trading range that had stifled volatility, crude broke out in recent weeks amid supply cuts delivered by OPEC+ and geopolitical risks, including Ukrainian drone strikes on Russian refineries. Meanwhile in Washington, Federal Reserve officials maintained their outlook for three interest-rate cuts this year, while signaling fewer reductions in 2025.
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