Oil down on strong dollar

Worries about weaker demand, rising interest rates outweighed supply concerns

NEW YORK:

Oil futures fell for a third day on Wednesday, as a stronger dollar and worries about weaker demand and rising interest rates outweighed supply concerns that followed last week’s OPEC+ cut to its production target.

Both OPEC and the US Energy Department slashed their demand outlooks. Last week, together with allies including Russia, OPEC sent prices rising when it agreed to cut supply by 2 million barrels per day (bpd).

Brent crude futures lost $2.18, or 2.3% to $92.11 a barrel as of 1649 GMT. US West Texas Intermediate crude lost $2.53, or 2.8%, at $86.82.

OPEC on Wednesday cut its outlook for demand growth this year by between 460,000 bpd and 2.64 million bpd, citing the resurgence of China’s COVID-19 containment measures and high inflation.

“The world economy has entered into a time of heightened uncertainty and rising challenges,” OPEC said in its monthly report.

The US Energy Department lowered its expectations for both production and demand in the United States. It now sees just a 0.9% increase in consumption in 2023, down from a previous forecast for a rise of 1.7%. Crude production is expected to grow by 5.2%, down from the 7.2% previously forecast.

Published in The Express Tribune, October 13^th, 2022.

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