LONDON, Sept 6 (Reuters) – Crude oil prices reversed on Wednesday after rising more than 1% in previous trading as a stronger dollar shook off fears stemming from cuts in supplies from Saudi Arabia and Russia. .
Brent crude futures fell 59 cents to $89.45 a barrel at 1145 GMT. US West Texas Intermediate Crude (WTI) futures traded 48 cents lower at $86.21 a barrel.
The dollar hit $104.69 against basket currencies, not far from its six-month high of $104.90 overnight. A stronger dollar would make fuel more expensive for other currency holders, which could weigh on oil demand.
“The reason the market has returned half its gains this morning and is languid is because the wording of the joint announcement warns that these production cuts will be reviewed on a monthly basis,” said John Evans of oil broker PVM. Ta.
“With this flexibility add-in, there is some leeway, but the market smells of tapering,” he said, adding that the struggle to contain inflation in the United States and other countries, oil prices nearing $100 a barrel. He cited some things, or circumstances such as Saudi Arabia’s oil impact. income.
A general view of the Lukoil refinery in Volgograd, Russia, April 22, 2022.Reuters/Reuters Photographer Acquisition of license rights
Brent futures were trading near a nine-month high last month at $4.13 a barrel, higher than the price of the past six months, reflecting short-term supply concerns.
As for US WTI futures, the front-to-six-month spread widened to $4.88 a barrel on Wednesday, also near a nine-month high.
Saudi Arabia and Russia on Tuesday extended voluntary production cuts through the end of the year, with the former to 1 million barrels a day and the latter to 300,000 barrels a day. These are on top of the April production cuts agreed by several OPEC+ producers by the end of 2024.
Both countries will review their decisions monthly and consider further cuts or increased production depending on market conditions.
But analysts said demand could drop as U.S. refineries enter a September-October maintenance period, and a possible increase in supplies from Iran, Venezuela and Libya could also weigh on the economy. Because of that, he warned that price increases could face obstacles.
Reported by Paul Karsten in London and Mohi Narayan in New Delhi. Additional reporting by his Arathy Somasekhar in Houston.Editing: David Evans and Jason Neely
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