Oil was down Friday morning in Asia as U.S. supplies continue to tighten. The black liquid was set for a flat finish to the week, with easing coal and gas prices curbing the fuel-switching that had increased demand for oil products.
The market hit multi-year highs earlier in the week as concerns about coal and gas shortages in China, India and Europe led to power providers switching to diesel and fuel oil.
“Weaker natural gas and coal prices would have taken away some of the support for the oil market,” ING commodities strategists said in a note.
Meanwhile, Wednesday’s data from the U.S. Energy Information Administration showed crude stocks at Cushing fell to 31.2 million barrels, their lowest level since October 2018. Despite the low levels, U.S. crude was set for a 0.5% rise for the week, not far off a seven-year high hit earlier in the week.
“However, there are clear concerns over the inventory drain that we are seeing at the WTI delivery hub, Cushing,” the ING note said
Some steam had come out of the market as investors were shifting their focus away from soaring front-month crude prices, according to Royal Bank of Canada (RBC) analysts.
“Some investors are also trimming risk across various energies, with the rationale being that energy crisis euphoria has peaked,” RBC analyst Michael Tran said in a note, which added, “these are not necessarily our views.”