SINGAPORE Oil prices fell more than 1 per cent on Wednesday, pressured by a strengthening dollar and crude storage builds that offset support from U.S. production cuts caused by Hurricane Ian.
The price of crude oil fell $1.08, or 1.3 per cent, to $85.19 per barrel at the time of 0341 GMT, while the U.S. West Texas Intermediate WTI crude futures were down 99 cents, or 1.3 per cent, at $77.51 per barrel.
The dollar hit a new two-decade peak against a basket of currencies on the back of rising Treasury yields. A strong dollar reduces demand for oil, making it more expensive for buyers using other currencies. Asian share markets slid as surging borrowing costs stoked fears of a global recession, spooking investors into the arms of the safe-haven dollar.
As Asian markets are tanking due to the surge in bond yields, demand outlooks are darkened amid a possible economic recession, according to Tina Teng, an analyst at CMC Markets.
The bond market turmoil sank risk assets, along with a stubbornly high U.S. dollar, which pressured oil prices, as traders focus on supply issues, Teng said.
According to market sources, the U.S. crude oil stocks rose by about 4.2 million barrels for the week ending Sept. 23 while gasoline inventories fell by about 1 million barrels, according to market sources.
According to sources, distillate stocks rose by about 438,000 barrels per day, according to the sources.
The report comes ahead of official Energy Information Administration data due on Wednesday at 4: 30 p.m. EDT.
Goldman Sachs cut its 2023 oil price forecast on Tuesday due to expectations of a weaker demand and a stronger U.S. dollar, but said global supply disappointments reinforced its long-term bullish outlook.
Producers began returning workers to offshore oil platforms after shutting in production ahead of Hurricane Ian which entered the U.S. Gulf of Mexico on Tuesday and is forecast to become a Category 4 storm over the warm waters of the Gulf.
BSEE producers lost 184 million cubic feet of natural gas, or nearly 9 percent of daily output, according to the Bureau of Safety and Environmental Enforcement, or about 190,000 barrels of oil per day of oil production. Personnel was evacuated from 14 production platforms and rigs, the BSEE said.
Ian is the first hurricane this year to disrupt oil and gas production in the U.S. Gulf of Mexico, which produces about 15 percent of the United States' crude oil and 5 percent of dry natural gas.