Oil rose from a 9-month low on US Gulf supply cuts, a soft dollar

An aerial view shows oil tanks of oil pipeline operator Transneft at Kozmino oil tanks on the coast of Nakohodka, Russia, June 13, 2022. Photo taken with a drone. REUTERS/Tatiana Mil

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  • BP, Chevron cut offshore oil production ahead of storm
  • Iraq OPEC controls prices, seeks market balance
  • Coming soon: API availability report at 2030 GMT

LONDON, Sept 27 (Reuters) – Oil rose more than 1% on Tuesday to hit a nine-month low, boosted by supply curbs in the Gulf of Mexico and some softness in the U.S. dollar.

Analysts also supported speculation that the Organization of the Petroleum Exporting Countries, known as OPEC+, and its allies could take action to curb the drop in prices by cutting supply. October 5 OPEC+ meets to set policy.

Brent crude was up 1.11, or 1.3 percent, at $85.17 a barrel by 0810 GMT. It fell to $83.65 on Monday, its lowest since January. U.S. West Texas Intermediate (WTI) crude was up $1.08, or 1.4 percent, at $77.79.

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In the year Crude rose early in 2022, with Brent hitting an all-time high of $147 in March after Russia invaded Ukraine, adding to concerns. Worries about a recession, higher interest rates and dollar strength weighed in.

“Oil is currently under the influence of financial forces,” said PVM oil broker Tamas Varga. “Meanwhile, relief efforts are being treated as temporary events, as was the case with Hurricane Ian in the US Gulf this morning.”

The decline in the strength of the US dollar, which had previously reached near 20-year highs, provided some support. A strong dollar makes crude more expensive for buyers using other currencies and tends to weigh on riskier assets.

Supply cuts were focused on providing some support on Tuesday. BP and Chevron said they had shut down production in the Gulf of Mexico on Monday as Hurricane Ian approached the region. Read more

The drop in prices has raised speculation that OPEC+ may intervene. Iraq’s oil minister said on Monday that the group was controlling prices and did not want a sharp rise or fall. Read more

“Only a production cut by OPEC+ could break the negative momentum in the short term,” said Giovanni Staunovo and Wayne Gordon of Swiss bank UBS.

Also in focus on Tuesday will be the latest US inventory reports, which analysts expect will show a 300,000 barrel increase in crude stocks. The American Petroleum Institute report was released at 2030 GMT.

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Additional reporting by Mohi Narayan in New Delhi; Editing by David Evans

Our Standards: The Thomson Reuters Trust Principles.

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