Oil Prices Decline as OPEC+ Maintains Production Levels, Dollar Strengthens
Oil prices fell sharply on Tuesday, with Brent crude dropping over 1% and WTI declining around 1.6%, as a decision by OPEC+ to pause planned output increases and a strengthening U.S. dollar added downward pressure on the market. The declines also followed weaker-than-expected manufacturing data from Asia and the United States, raising concerns about future oil demand.
the market is reacting to a complex interplay of factors signaling potential oversupply and economic headwinds. OPEC+ agreed on Sunday to a modest output increase for December but will maintain current levels in the frist quarter of next year. This decision, combined with a resurgent dollar and slowing global manufacturing, has fueled investor caution.
Brent crude futures fell 90 cents, or 1.4%, to $63.99 a barrel by 1056 GMT. U.S. West Texas Intermediate crude was down 95 cents, or approximately 1.6%, at $60.10 a barrel.
Analysts point to weakening economic indicators as a key driver of the price decline. “The succession of poor manufacturing PMIs from Asia and then the U.S. ISM is a worry for oil demand. So is the ever present market upsetting tariff threat,” said John Evans,analyst at PVM Oil associates. He added, “The renaissance of the U.S. dollar is another suppressant for oil prices at the moment and we anticipate a resumption of a grind lower in the here and now.”
The impact of recent U.S. sanctions on Russian energy companies Lukoil and Rosneft is also diminishing, according to bjarne Schieldrop, chief analyst at SEB Research.He anticipates that further sanctions scheduled to take effect on November 21 will likely have a limited, temporary effect.
A stronger dollar further exacerbates the situation, making oil more expensive for buyers using other currencies. The dollar has been gaining strength amid uncertainty surrounding potential future interest rate cuts by the Federal Reserve.
Recent data from Asia highlighted the slowdown, with Japan’s manufacturing activity contracting at its fastest pace in 19 months in October due to declining demand in the automotive and semiconductor sectors.
Market participants are now awaiting U.S. inventory data from the American Petroleum Institute (API), expected later Tuesday.A preliminary Reuters poll forecasts a rise in U.S. crude oil stockpiles last week.
