Salem Radio Network News Saturday, December 2, 2023


Oil edges lower on strong US dollar, mixed supply cues

By Natalie Grover

LONDON (Reuters) -Oil prices dipped on Tuesday, after falling to a three-week low in the previous session, on a stronger U.S. dollar, a darkening global macroeconomic outlook and mixed supply signals.

Brent futures crept 56 cents lower to $90.15 a barrel by 1212 GMT, while U.S. West Texas Intermediate crude (WTI), fell 42 cents to $88.4 per barrel. Earlier in the session, prices fell by more than 1%.

“(Brent) crude oil prices slid to (around) $90 a barrel as rising US yields and a stronger US dollar dominated market sentiment,” said ANZ analysts.

“While supply remains tight, higher interest rates means expensive storage of inventories. This could lead to further destocking of oil inventories while increasing spot availability.”

The U.S. dollar on Monday rose to a 10-month high against a basket of major peers after the U.S. government avoided a partial shutdown and economic data fuelled expectations the Federal Reserve will keep rates higher for longer, or even hike them again.

Higher interest rates and a stronger dollar make oil more expensive for holders of other currencies, which could dampen oil demand.

Meanwhile, an announcement by Turkey’s energy minister that the country will restart operations this week on a pipeline from Iraq that has been suspended for about six months further weighed on prices.

“In theory, under the terms of the OPEC+ deal, production (outside the Gulf Cooperation Council) should remain flat over Q4. However, Iraq’s compliance has been somewhat spotty in the past and export levels should be expected to rise, assuming the pipeline resumes operations as planned,” BMI Research analysts said.

Iraq – OPEC’s second-biggest producer – on Tuesday also said it would award 30 new oil and gas projects in its fifth + and sixth licensing rounds.

OPEC+, the Organization of the Petroleum Exporting Countries and allies, is expected to keep its output policy unchanged when it meets on Wednesday, keeping supplies tight.

There could be an element of profit-taking ahead of the OPEC+ meeting after the strong rally since mid-August, or maybe economic fears are weighing, said Craig Erlam, OANDA analyst.

“The question now is whether…the recent shift in risk appetite will influence the outcome of the meeting.”

Saudi Arabia is expected to raise its November official selling price of Arab Light crude to Asia for the fifth straight month, according to a Reuters survey.

(Reporting by Natalie Grover, Laura Sanicola and Trixie Yap, Editing by Shri Navaratnam, Simon Cameron-Moore, Peter Graff, Ed Omsond and Louise Heavens)


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