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Oil prices fell on Friday as the rising value of the US dollar and pessimism over China’s economic revival blunted gains from Saudi Arabia and Russia’s supply curbs.
International benchmark crude Brent traded at $89.64 per barrel at 10.01 a.m. local time (0701 GMT), a 0.31% loss from the closing price of $89.92 a barrel in the previous trading session on Thursday.
The American benchmark West Texas Intermediate (WTI) traded at the same time at $86.52 per barrel, down 0.40% from the previous session’s close of $86.87 per barrel.
Both benchmarks were set to end the week with gains after hitting nine-month highs over supply fears triggered by the output cut decisions by two major producers of OPEC+, Saudi Arabia and Russia.
These producer countries declared on Tuesday their intention to extend existing output restrictions until the end of 2023, with possible monthly modifications. The decision is expected to reduce the group’s output by around 1.3 million barrels per day for the remainder of the year.
The price momentum triggered by supply tightness from Saudi Arabia and Russia’s oil output cuts was supported by a larger-than-expected draw in stockpiles in the US, the world’s largest oil-consuming country.
US commercial crude oil inventories decreased by 1.5%, or 6.3 million barrels, during the week ending Sept. 1, according to data released by the Energy Information Administration (EIA) on Thursday.
Signaling a demand increase in the country, the draw exceeded the American Petroleum Institute’s expectations of a 5.5 million-barrel draw.
However, the strengthening of the US dollar, which made crude less affordable for oil-importing countries, restricted weekly price upticks.
The dollar index ended Thursday at 105, its highest daily close since March 9, amid growing fears that the US Federal Reserve (Fed) may not have reached the end of its interest rate hikes.
Meanwhile, the Chinese yuan fell to its lowest level against the US dollar in 16 years on Thursday, reflecting a growing feeling of pessimism about China’s economy and financial markets. The yuan slipped 0.2% to 7.3294 per greenback in both onshore and offshore markets.
In addition, China’s crude oil imports jumped in August as refiners accelerated processing to benefit from higher profits from fuel exports, according to official statistics provided on Thursday by China’s General Administration of Customs.
Shipments to the world’s largest oil importer in August were 12.43 million barrels per day, 20.9% higher than in July and 30.9% more than a year earlier.
