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Picture: BLOOMBERG
Picture: BLOOMBERG

Oil edged lower on Wednesday ahead of a panel meeting of Opec+ ministers, as the market weighed expectations of supply tightness against fears that high interest rates could reduce fuel demand.

Brent crude oil futures dipped 6c to $90.86 a barrel by 3.45am GMT, while US West Texas Intermediate (WTI) crude fell 5c to $89.18 a barrel.

Data on Tuesday night showed that US job openings increased by the largest amount in more than two years, prompting a further sharp rise in treasury yields.

Along with fears that interest rates will stay high for some time, oil benchmarks also have been pressured by concerns that the strengthening dollar would dent demand, as it makes oil more expensive for holders of other currencies.

“A resilient labour market is deemed to be providing more room for the Federal Reserve [Fed] to keep rates high for longer,” said Yeap Jun Rong, market analyst at IG.

The Organization of the Petroleum Exporting Countries and allies, or Opec+, is expected to keep output policy unchanged when it meets on Wednesday, after members Saudi Arabia and Russia extended output cuts to the end of the year.

Saudi Arabia is expected to raise its November official selling price of Arab Light crude to Asia for a fifth straight month, according to a Reuters survey, as market participants expect supplies of medium sour crude to remain tight.

“The recent oil price reversal could be a reason for the cartel to keep their supply cuts unchanged in today’s review meeting,” said ANZ Bank’s analysts Brian Martin and Daniel Hynes in a note.

Meanwhile, talks to restart Iraqi oil exports via a crude oil pipeline that runs through Turkey are still ongoing, an Iraqi oil official told Reuters, one day after Turkey said operations would start again this week after a near six-month stoppage.

Russia is setting no time frame for a fuel export ban it introduced last month, and which will remain in place as long as necessary to stabilise prices and address shortages on the domestic market, Interfax cited Deputy Prime Minister Alexander Novak as saying.

Investors are also closely watching supply and demand in the US. Industry data showed crude stocks fell by about 4.2-million barrels in the week ended September 29, according to market sources citing American Petroleum Institute (API) figures on Tuesday.

US government data on stockpiles is due on Wednesday. Eight analysts polled by Reuters estimated on average that crude inventories fell by about 500,000 barrels in the week to September 29. 

Reuters

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