Oil prices dropped on Wednesday as demand worries brought on by macroeconomic headwinds overshadowed Saudi Arabia’s pledge to maintain oil supply curbs through the end of 2023.
At 8:41 GMT, Brent crude oil futures were down 58 cents, or 0.64%, to $90.34 per barrel, while WTI was down 66 cents, or 0.74%, to $88.57 per barrel in the United States. At their intraday lows on Wednesday, both futures were trading more than $1 below Tuesday’s settlement price, with Brent dropping to $89.83 per barrel and WTI to $88.11 per barrel.
Fears about demand, which result from macroeconomic headwinds, continue to pressure oil prices. An analyst at City Index, Fiona Cincotta, stated, “oil prices are resuming their decline amid concerns over high interest rates for longer, hurting the demand outlook and as investors look ahead to the OPEC meeting.”
The voluntary decrease in oil supply of 1 million barrels per day (bpd) by Saudi Arabia will continue through the end of the year, the country’s energy minister announced on Wednesday.
Until the end of the year, Russia said it would maintain its current 300,000 bpd oil export limitations, and in November, it would evaluate its voluntary 500,000 bpd output cut from April. According to Nikolai Shulginov, the Russian Energy Minister, Russia was also debating “at all levels” granting partial approval for petroleum exports.
According to a story published on Wednesday by the newspaper Kommersant, which cited unnamed sources, Russia may be prepared to relax its ban on diesel in the coming days. Investor mood could also be suffering from a high US dollar.
Even when, as there is today, a favorable underlying background, the present dollar surge is “a rally that will continue to haunt all markets including oil,” according to PVM analyst John Evans.
A strong dollar can reduce the price of oil for holders of other currencies, reducing demand as the dollar is the oil industry’s primary trading currency.
According to other recent purchasing managers’ index (PMI) statistics, the eurozone scored 47.2 in September, up slightly from 46.7 in August. Anything below 50 indicates a decline in the economy.
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