Oil futures prices ended the day higher after falling to three-week lows, weighed down by a stronger US dollar and increasingly gloomy global economic signals, but supported by tightening oil supplies .
Prices fell early in the day as the U.S. dollar rose to a 10-month high against a basket of major currencies.
The strengthening increased after data on job vacancies in the United States pointed to a still tight labor market that could lead the Federal Reserve (Fed, the North American central bank) to raise interest rates next month.
We have seen an incredible rise in projected Treasury and dollar yields and this has raised concerns about the future of demand, said Phil Flynn, analyst at Price Futures Group.
Higher interest rates and a stronger dollar make oil more expensive for holders of other currencies, which could dampen oil demand.
Investors were keeping a close eye on any supply updates following last month’s decision by Saudi Arabia and Russia to extend their voluntary production cuts until the end of the year. The two countries belong to OPEC+, the Organization of Petroleum Exporting Countries and allies.
The producer group is expected to keep production policy unchanged when it meets tomorrow, keeping supply tight.
Saudi Arabia is expected to raise the official November selling price of Arab Light crude to Asia for the fifth consecutive month, according to a Reuters poll.
Russia has not set any deadline for the fuel export ban it introduced last month. According to the country’s deputy prime minister, Alexander Novak, it should remain in force as long as necessary to stabilize prices and resolve shortages in the domestic market.
Negotiations to restart Iraqi oil exports through a pipeline running through Turkey are still ongoing, an Iraqi oil official told Reuters, a day after Turkey said operations would restart this week following a shutdown of almost six months.
Iraq, the Ope’s second-largest producer, also said it would approve 30 new oil and gas exploration projects in its fifth and sixth licensing rounds.
Market participants are now awaiting the release of weekly data on North American oil inventories. The U.S. government’s Energy Information Administration will release the data tomorrow at 11:30 a.m.
The price of the WTI oil contract (CCOM:OILCRUDE) traded on Nymex for delivery in November rose 0.82%, quoted at US$89.23 per barrel. The price of the Brent contract (CCOM:OILBRENT) traded on the ICE platform, with delivery for December, increased 0.47%, quoted at US$ 90.92 per barrel.
US Crude Oil Inventories Fall More than Expected: API
Stocks of crude oil in the US dropped by 4.21 million barrels in the week that ended September 29th, 2023, following a 1.586 million barrels increase in the previous week, data from the API’s Weekly Statistical Bulletin showed. It marked the sixth weekly draw in US Crude Oil Inventories in the last eight weeks, while analysts expected a decline of 92 thousand barrels.