(CTN News) – Early on Wednesday, oil prices dropped as the dollar strengthened and reports that U.S. crude oil stocks increased more than anticipated fueled concerns that a worldwide recession would reduce demand.
At 01:11 GMT, December Brent oil futures were down $1.17, or 1.3%, at $92.35 per barrel after rising 26 cents the previous session.
The price of December-delivery U.S. West Texas Intermediate (WTI) oil futures decreased by 88 cents, or 1%, to $84.44 a barrel, reversing the previous session’s rise.
In recent weeks, “the threat of supply cutbacks has been outweighed by the potential of a global economic downturn and tighter monetary policy,” according to analysts from ANZ Research.
Market sources citing information from the American Petroleum Institute, an industry body, claim that U.S. oil stockpiles increased by around 4.5 million barrels in October 21.
That exceeded the five experts Reuters surveyed, who had predicted an average build of approximately 200,000 barrels.
In contrast to experts’ predictions of a decrease of 1.1 million barrels, API data revealed that distillate stockpiles, which include diesel, heating oil, and jet fuel, increased by around 600,000 barrels in the same period.
However, the gasoline in stock decreased by around 2.3 million barrels, almost twice as much as experts had predicted.
On Wednesday at 14:30 GMT, the Energy Information Administration will provide official statistics on the United States stockpiles.
The market was also affected by a higher dollar. The dollar index, which compares the dollar value to six important rivals, increased slightly to 111.02.
A stronger dollar reduces the demand for oil by raising the cost of petroleum for people using foreign currencies.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies headed by Russia, collectively known as OPEC+, recently decided to reduce oil supply, and despite this, the White House on Tuesday commended Saudi Arabia’s efforts to support Ukraine in its conflict with Russia.
U.S. President Joe Biden has warned the Saudis would suffer repercussions for siding with Russia and agreeing to limit oil supplies because he is concerned that gas prices will spike before the November 8 midterm elections.
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