Oil slips on oversupply concerns, stronger dollar
By Seher Dareen
LONDON (Reuters) – Oil prices fell more than 1% on Tuesday as OPEC+’s decision to pause production increases in the first quarter of next year, along with weak manufacturing data and a stronger dollar, weighed on the market.
Brent crude futures were down 90 cents, or 1.4%, at $63.99 a barrel by 10:56 GMT. U.S. West Texas Intermediate crude fell 95 cents, or about 1.6%, to $60.10 a barrel.
“Weak manufacturing PMIs from Asia followed by the US ISM are worrisome for oil demand. The current market is also bucking the tariff threat,” said PVM Oil Associates analyst John Evans.
“The US dollar resurgence is another depressant for oil prices at the moment, and we expect a resumption of lower value here and now.”
On Sunday, the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, agreed to a small increase in oil production for December and a pause in increases in the first quarter of next year.
Bjarne Schieldrop, chief commodities analyst at SEB Research, said in a note that the increase in oil prices also faded as the United States imposed sanctions on Russian energy companies Lukoil and Rosneft.
“It will likely evaporate, disappear or be lifted over time when sanctions come into effect on November 21 (against other companies that continue to trade with Russian companies).”
As divisions over whether the Fed will cut interest rates again in December led investors to rein in their bets on a rate cut, the strengthening of the dollar weighed on the market, hovering near its highest level in three months. [USD/]
A higher dollar makes assets priced in dollars more expensive for those who hold other currencies.
In Asia, Japan’s manufacturing activity contracted at the fastest pace in 19 months in October due to a drop in demand in key automotive and semiconductor sectors, according to a private sector survey.
Market participants are now awaiting the latest US inventory data from the American Petroleum Institute (API), which will be released later in the day. U.S. crude oil inventories were expected to rise last week, a preliminary Reuters poll showed. [EIA/S]
(Reporting by Seher Dareen in London, Ashitha Shivaprasad in Bengaluru and Emily Chow in Singapore; Editing by Ros Russell and Louise Heavens)
