Oil prices trimmed earlier gains on Wednesday as the dollar strengthened but continued to find support from a tightening of supplies from Russia and other OPEC members and a drop in U.S. crude stocks.
Brent crude was up 32 cents, or 0.42%, at $77.37 a barrel at 1217 GMT. U.S. West Texas Intermediate crude climbed 47 cents, or 0.63%, to $74.72.
Both benchmarks had risen more than 1% earlier in the session.
“The dollar’s safe haven status is appreciated as fears of renewed U.S. inflationary pressure grow,” said Tamas Varga, an analyst with oil broker PVM.
A stronger dollar makes oil more expensive for holders of other currencies.
“The drop (in oil prices) seems to be driven by a general shift in risk sentiment with European equity markets falling and the USD getting stronger,” said UBS analyst Giovanni Staunovo.
Oil output from the Organization of the Petroleum Exporting Countries fell in December after two months of increases, a Reuters survey showed. Field maintenance in the United Arab Emirates offset a Nigerian output hike and gains elsewhere in the group.
Oil prices rise on demand, possible disruption
In Russia, oil output averaged 8.971 million barrels a day in December, below the country’s target, Bloomberg reported citing the energy ministry.
U.S. crude oil stocks fell last week while fuel inventories rose, market sources said, citing American Petroleum Institute figures on Tuesday.
Despite the unexpected draw in crude stocks, the significant rise in product inventories was putting those prices under pressure, Varga added.
Analysts expect oil prices to be on average down this year from 2024 due in part to production increases from non-OPEC countries.
“We are holding to our forecast for Brent crude to average $76/bbl in 2025, down from an average of $80/bbl in 2024,” BMI, a division of Fitch Group, said in a client note.
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