Oil prices fell on Thursday as higher US interest rates buoyed the dollar and raised concerns that a global recession will dampen demand for the fuel while supply worries about limiting losses. Brent oil was down 85 cents, or 0.9%, to $95.30 a barrel. Meanwhile, US Crude futures for WTI declined $1.01, or 1.1%, to $88.99. Both rose $1 on Wednesday, buoyed by another move in US oil stocks, despite the Fed raising interest rates by 75 bps and Chairman Jerome Powell saying it was too early to consider a break.
According to CMC Markets analyst Tina Teng, oil is being dragged down by a strong dollar, with some market participants likely booking profits after recent gains. A strong dollar affects oil demand, raising fuel costs for buyers using other currencies.
OPEC may also struggle to meet previously fixed output limitations in the coming months, keeping supplies tight. For the first time since June, OPEC output declined in October. OPEC and its partners, including Russia, have also agreed to reduce their goal output by 2 million barrels per day (BPD) beginning in November. The market also anticipates more demand from China, hoping Beijing will relax its zero-COVID regulations. Chinese authorities vowed on Wednesday that growth would remain a priority and that changes would continue.