Oil slips on stronger dollar, oversupply fears
By Arathy Somasekhar
HOUSTON (Reuters) -Oil prices eased on Tuesday as weaker manufacturing numbers and a stronger dollar weighed on demand, while the OPEC+ decision to pause output hikes in the first quarter of next year could signal the group's concern about a potential supply glut.
Brent crude futures fell 31 cents, or 0.5%, to $64.58 a barrel by 12:27 p.m. (1726 GMT). U.S. West Texas Intermediate crude was down 33 cents, or 0.5%, at $60.72.
"Crude futures are feeling the pressure today from high U.S. dollar valuation. The U.S. stock market is also seeing a heavy downside correction in the early trade as the government shutdown may be beginning to add downside pressure, which could eventually hurt domestic fuel demand," said Dennis Kissler, senior vice president of trading at BOK Financial.
The dollar climbed to a fresh four-month high against the euro on Tuesday as divisions in the Federal Reserve raised doubt about the prospect of another rate cut this year. A stronger U.S. currency makes dollar-priced assets such as oil more expensive to those holding other currencies.
Wall Street's main indexes slipped to over one-week lows on Tuesday following warnings of a market selloff from some big U.S. banks.
The U.S. government shutdown on Tuesday entered its 35th day, matching a record set during President Donald Trump's first term for the longest in history. The toll increases by the day. Food assistance for the poor was halted for the first time, federal workers from airports to law enforcement and the military are going unpaid and the economy is flying blind with limited government reporting.
In Asia, Japan's manufacturing activity shrank in October at the fastest pace in 19 months on a slump in demand in key automotive and semiconductor sectors, a private-sector survey showed.
On the supply side, meanwhile, the Organization of the Petroleum Exporting Countries and their allies, known as OPEC+, on Sunday, agreed to a small oil output increase for December and a pause in increases in the first quarter of next year.
Additionally, the boost to oil prices from the U.S. sanctioning Russian energy companies Lukoil and Rosneft was fading, chief analyst of commodities Bjarne Schieldrop at SEB Research said in a note.
"Come Nov 21 when the sanctions (on other companies that continue to trade with the Russian companies) go into force they will likely evaporate, disappear or be pushed out in time."
Market participants are now awaiting the latest U.S. inventory data from the American Petroleum Institute (API), due later in the day. A preliminary Reuters poll showed U.S. crude oil stockpiles were expected to have risen last week. [EIA/S]
(Reporting by Seher Dareen in London, Ashitha Shivaprasad in Bengaluru and Emily Chow in Singapore; Editing by Ros Russell, Louise Heavens and Tomasz Janowski)
Content Original Link:
" target="_blank">
