Oil prices fall more than 1% as dollar scales new peak

Oil prices fell more than 1% on Wednesday, pressured by a strengthening dollar and crude storage builds that offset support from U.S. production cuts caused by Hurricane Ian, Reuters reported.

Brent crude futures fell $1.02, or 1.2%, to $85.25 per barrel by 0630 GMT, while U.S. West Texas Intermediate (WTI) crude futures were down 97 cents, or 1.2%, at $77.53 per barrel. Both contracts had risen over 2% in the previous session.

The dollar hit a fresh two-decade peak against a basket of currencies on Wednesday as rising global interest rates fed recession concerns. A strong dollar reduces demand for oil by making it more expensive for buyers using other currencies.

Asian share markets sank as surging borrowing costs stoked fears of a global recession, spooking investors into the safe-haven dollar.

“With Asian markets tanking due to the surge in bond yields, demand outlooks are darkened amid a possible nearing economic recession,” said Tina Teng, an analyst at CMC Markets.

“Traders’ focus is not on the supply issues right now as the bond market’s turmoil sunk risk assets, along with a stubbornly high U.S. dollar, which pressured oil prices,” Teng added.

U.S. crude oil stocks rose by about 4.2 million barrels for the week ended Sept. 23, while gasoline inventories fell about 1 million barrels, according to market sources on Tuesday, citing figures from industry group the American Petroleum Institute.