By 1359 GMT, Brent crude futures rose six cents to $90.77 a barrel, and US West Texas Intermediate crude rose 34 cents to $89.16 a barrel. Prices had fallen by more than one percent earlier in the session.
ANZ analysts said in a note to clients, “Brent crude prices fell to (about) $90 per barrel, with rising US yields and the strength of the dollar dominating market sentiment.”
“While supply remains limited, higher interest rates mean expensive storage of inventories. This could lead to further drawdown of oil stocks,” they added.
Yesterday, Monday, the dollar rose to its highest level in 10 months against a basket of major currencies after the US government avoided a partial closure and economic data reinforced expectations that the US Federal Reserve would keep interest rates high for a longer period or even raise them again.
Higher interest rates, coupled with a stronger dollar, make oil more expensive for holders of other currencies, which could lead to lower demand for it.
An Iraqi oil official told Reuters on Tuesday that talks to resume exporting Iraqi oil from a crude pipeline passing through Turkey are still ongoing, one day after Turkey announced that operations would begin again this week after a nearly six-month hiatus.
“In theory, under the terms of the OPEC+ agreement, production (non-GCC) should remain flat during the fourth quarter,” analysts from BMI Research said in a report to clients. “However, Iraq’s compliance has been somewhat spotty in the past.” Export levels are expected to rise, assuming the pipeline resumes operations.
Iraq, the second largest producer in the Organization of the Petroleum Exporting Countries (OPEC) after Saudi Arabia, said on Tuesday that the appendix of the fifth licensing round and the sixth round will include 30 new oil and gas projects.
The OPEC+ alliance, which includes OPEC in addition to Russia and other allies, is expected to keep its current production policy unchanged when it meets tomorrow, Wednesday, which means continued scarcity of supply.
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