LONDON: Oil prices fell over 1percent on Tuesday as OPEC+’s decision to pause output hikes in the first quarter next year along with weak manufacturing data and a stronger dollar weighed on the market.
Brent crude futures fell 76 cents, or 1.2 percent, to USD64.13 a barrel by 1256 GMT. US West Texas Intermediate crude was down 81 cents, or around 1.3percent, at USD60.24 a barrel.
“The succession of poor manufacturing PMIs from Asia and then the US ISM is a worry for oil demand. So is the ever present market upsetting tariff threat,” said John Evans, analyst at PVM Oil Associates. “The renaissance of the US dollar is another suppressant for oil prices at the moment and we anticipate a resumption of a grind lower in the here and now.”
On Sunday, the Organization of the Petroleum Exporting Countries and their allies, known as OPEC+, agreed to a small oil output increase for December and a pause in increases in the first quarter of next year.
aditionally, the boost to oil prices from the US sanctioning Russian energy companies Lukoil and Rosneft was fading, chief analyst of commodities Bjarne Schieldrop at SEB Research said in a note. “Come Nov 21 when the sanctions (on other companies that continue to trade with the Russian companies) go into force they will likely evaporate, disappear or be pushed out in time.”
Also weighing on the market was a stronger dollar that hovered near a three-month high as a divided Federal Reserve - on whether or not to cut rates again in December - prompted traders to rein in interest rate cut wagers.
A higher dollar makes dollar-priced assets more expensive to those holding other currencies. In Asia, Japan’s manufacturing activity shrank in October at the fastest pace in 19 months on a slump in demand in key automotive and semiconductor sectors, a private-sector survey showed.
Market participants are now awaiting the latest US inventory data from the American Petroleum Institute (API), due later in the day. A preliminary Reuters poll showed US crude oil stockpiles were expected to have risen last week.
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