Oil recoups some losses on supply fears, strong dollar weighs

Oil futures recouped some losses on Wednesday after dropping by 2% in the previous session, supported by supply worries stemming from OPEC+ production cuts, although a stronger dollar weighed on market sentiment, Reuters reported.
Brent crude futures were down 2 cents, or 0.02%, to $94.27 a barrel by 0727 GMT after hitting a session low of $93.33 a barrel.
U.S. West Texas Intermediate crude was at $89.14 a barrel, down 21 cents, or 0.24%. The contract fell to a session low of $88.27 per barrel earlier in the day.
“Crude oil prices will gain further momentum after a brief retreat and can edge higher towards $104 a barrel for Brent and around $98 a barrel for WTI crude amid supply tightness caused by OPEC and allies-led output cuts and disruptions to Russian oil production,” said Sugandha Sachdeva, vice president of commodity and currency at Religare Broking.
Last week, the Organization of the Petroleum Exporting Countries and allies including Russia, together known as OPEC+, decided to cut their output target by 2 million barrels per day.
Citi Research expects U.S. crude prices to average $96 a barrel and Brent prices to average $101 per barrel in 2022 in response to tightening supplies due to the output cut.
Meanwhile, the U.S. dollar hit a new 24-year high against the yen on Wednesday on concerns about inflation and the pace of U.S. rate increases. A stronger dollar makes dollar-denominated commodities more expensive for holders of other currencies and tends to weigh on oil and other risk assets.
The U.S. consumer price report is due on Thursday.
Also on the downside, the International Monetary Fund on Tuesday cut its global growth forecast for 2023 and warned of increasing risk of a global recession. read more read more
U.S. inventory data has been delayed by a day this week because of a holiday on Monday. Industry data from the American Petroleum Institute is due at 4:30 p.m. EDT (2030 GMT) on Wednesday while the U.S. Energy Information Administration, will release its data at 11 a.m. EDT (1500 GMT) on Thursday.