Singapore, Sep 28 (BNA): Oil prices fell 1% today, Wednesday, weighed by a stronger dollar and crude oil hoarding that offset support from US production cuts caused by Hurricane Ian.
Brent crude futures fell $1.08, or 1.3%, to $85.19 a barrel by 03:41 GMT, while US West Texas Intermediate crude futures were down 99 cents, or 1.3%, at $77.51 a barrel.
The dollar hit a two-decade high against a basket of currencies on the back of rising Treasury yields. A stronger dollar reduces demand for oil by making it more expensive for buyers who use other currencies, according to Reuters.
Asian stock markets tumbled as rising borrowing costs stoked fears of a global recession, spooking investors into the arms of the safe-haven dollar.
“With Asian markets dragged down by the surge in bond yields, the demand outlook darkens amid a potential economic recession approaching,” said Tina Ting, analyst at CMC Markets.
“Traders are not focusing on supply issues at the moment as the turmoil in the bond market has dumped risk assets, along with a stronger US dollar, which has put pressure on oil prices,” Teng added.
US crude oil stocks rose by about 4.2 million barrels for the week ending September 23, while gasoline stocks fell by about one million barrels, according to market sources on Tuesday, citing figures from the American Petroleum Institute.
Distillate stocks rose by 438,000 barrels, according to the sources, who requested anonymity.
This report comes ahead of official Energy Information Administration data due on Wednesday at 4:30 PM ET.
Goldman Sachs lowered its oil price forecast for 2023 on Tuesday, due to expectations of weak demand and a strong US dollar, but said disappointments in global supplies bolstered its long-term bullish outlook.
Producers began returning workers to offshore oil platforms after production was halted before Hurricane Ian, which entered the US Gulf of Mexico on Tuesday and is expected to become a dangerous Category 4 storm over the warm waters of the Gulf.
About 190,000 barrels per day of oil production, or 11% of the Gulf’s total production, has been shut down, according to the maritime regulator, the Bureau of Safety and Environmental Enforcement (BSEE).
Producers lost 184 million cubic feet of natural gas, or roughly 9% of daily production. BSEE said employees have been evacuated from 14 production platforms and platforms.
Ian is the first hurricane this year to disrupt oil and gas production in the US Gulf of Mexico, which produces about 15% of US crude oil and 5% of dry natural gas.
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