BusinessOil & Gas/Mining

Oil drops on dollar strength, but OPEC+ talks offer support

Brent crude futures fell US$1.18, or 1.3%, to US$88.14 a barrel by 0823 GMT and U.S. crude futures dropped by US$1.11, or 1.4%, to US$81.04

Oil prices fell on Thursday, with a stronger dollar paring the previous day’s more than US$3 gain, though losses were capped by indications that the OPEC+ producer group might cut output.

Brent crude futures fell US$1.18, or 1.3%, to US$88.14 a barrel by 0823 GMT and U.S. crude futures dropped by US$1.11, or 1.4%, to US$81.04.

Both benchmarks rebounded in the previous two sessions from nine-month lows earlier in the week, buoyed by a temporary dive in the dollar index and a larger than expected U.S. fuel inventory drawdown.

However, the dollar index rose again on Thursday, dampening investor risk appetite and stoking fears recession fears.

The Bank of England said it is committed to buying as many long-dated government bonds as needed between Wednesday and 14 October to stabilise its currency after the British government’s budget plans announced last week sent sterling tumbling.

Goldman Sachs cut its 2023 oil price forecast on Tuesday, citing expectations of weaker demand and a stronger U.S. dollar, but said global supply disappointments reinforced its long-term bullish outlook.

In China, the world’s biggest crude oil importer, travel during the forthcoming week-long national holiday is set to hit its lowest level in years as Beijing’s zero-COVID rules keep people at home while economic woes curb spending.

Citi economists have lowered their China GDP forecast for the fourth quarter to 4.6% growth year on year from 5% expected previously.

“Stringent zero-COVID measures and a weak property sector continue to cloud growth prospects,” Citi analysts wrote on Wednesday.

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Source
Reuters
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