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Oil Falls from Highest since October as Dollar Strengthens

People stand on the the pier with offshore oil and gas platform Esther in the distance on January 5, 2025 in Seal Beach, California. Mario Tama/Getty Images/AFP
People stand on the the pier with offshore oil and gas platform Esther in the distance on January 5, 2025 in Seal Beach, California. Mario Tama/Getty Images/AFP
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Oil Falls from Highest since October as Dollar Strengthens

People stand on the the pier with offshore oil and gas platform Esther in the distance on January 5, 2025 in Seal Beach, California. Mario Tama/Getty Images/AFP
People stand on the the pier with offshore oil and gas platform Esther in the distance on January 5, 2025 in Seal Beach, California. Mario Tama/Getty Images/AFP

Oil prices dipped on Monday amid a strong US dollar ahead of key economic data by the US Federal Reserve and US payrolls later in the week.
Brent crude futures slid 28 cents, or 0.4%, to $76.23 a barrel by 0800 GMT after settling on Friday at its highest since Oct. 14.
US West Texas Intermediate crude was down 27 cents, or 0.4%, at $73.69 a barrel after closing on Friday at its highest since Oct. 11, Reuters reported.
Oil posted five-session gains previously with hopes of rising demand following colder weather in the Northern Hemisphere and more fiscal stimulus by China to revitalize its faltering economy.
However, the strength of the dollar is on investor's radar, Priyanka Sachdeva, a senior market analyst at Phillip Nova, wrote in a report on Monday.
The dollar stayed close to a two-year peak on Monday. A stronger dollar makes it more expensive to buy the greenback-priced commodity.
Investors are also awaiting economic news for more clues on the Federal Reserve's rate outlook and energy consumption.
Minutes of the Fed's last meeting are due on Wednesday and the December payrolls report will come on Friday.
There are some future concerns about Iranian and Russian oil shipments as the potential for stronger sanctions on both producers looms.
The Biden administration plans to impose more sanctions on Russia over its war on Ukraine, taking aim at its oil revenues with action against tankers carrying Russian crude, two sources with knowledge of the matter said on Sunday.
Goldman Sachs expects Iran's production and exports to fall by the second quarter as a result of expected policy changes and tighter sanctions from the administration of incoming US President Donald Trump.
Output at the OPEC producer could drop by 300,000 barrels per day to 3.25 million bpd by second quarter, they said.
The US oil rig count, an indicator of future output, fell by one to 482 last week, a weekly report from energy services firm Baker Hughes showed on Friday.
Still, the global oil market is clouded by a supply surplus this year as a rise in non-OPEC supplies is projected by analysts to largely offset global demand increase, also with the possibility of more production in the US under Trump.

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Oil Prices Steady as Markets Weigh Demand against US Inventories

FILE - Pump jacks extract oil from beneath the ground in North Dakota, May 19, 2021. (AP Photo/Matthew Brown, File)
FILE - Pump jacks extract oil from beneath the ground in North Dakota, May 19, 2021. (AP Photo/Matthew Brown, File)
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Oil Prices Steady as Markets Weigh Demand against US Inventories

FILE - Pump jacks extract oil from beneath the ground in North Dakota, May 19, 2021. (AP Photo/Matthew Brown, File)
FILE - Pump jacks extract oil from beneath the ground in North Dakota, May 19, 2021. (AP Photo/Matthew Brown, File)

Oil prices were little changed on Thursday as investors weighed firm winter fuel demand expectations against large US fuel inventories and macroeconomic concerns.

Brent crude futures were down 3 cents at $76.13 a barrel by 1003 GMT. US West Texas Intermediate crude futures dipped 10 cents to $73.22.

Both benchmarks fell more than 1% on Wednesday as a stronger dollar and a bigger than expected rise in US fuel stockpiles pressured prices.

"The oil market is still grappling with opposite forces - seasonal demand to support the bulls and macro data that supports a stronger US dollar in the medium term ... that can put a ceiling to prevent the bulls from advancing further," said OANDA senior market analyst Kelvin Wong.

JPMorgan analysts expect oil demand for January to expand by 1.4 million barrels per day (bpd) year on year to 101.4 million bpd, primarily driven by increased use of heating fuels in the Northern Hemisphere.

"Global oil demand is expected to remain strong throughout January, fuelled by colder than normal winter conditions that are boosting heating fuel consumption, as well as an earlier onset of travel activities in China for the Lunar New Year holidays," the analysts said.

The market structure in Brent futures is also indicating that traders are becoming more concerned about supply tightening at the same time demand is increasing.

The premium of the front-month Brent contract over the six-month contract reached its widest since August on Wednesday. A widening of this backwardation, when futures for prompt delivery are higher than for later delivery, typically indicates that supply is declining or demand is increasing.

Nevertheless, official Energy Information Administration (EIA) data showed rising gasoline and distillates stockpiles in the United States last week.

The dollar strengthened further on Thursday, underpinned by rising Treasury yields ahead of US President-elect Donald Trump's entrance into the White House on Jan. 20.

Looking ahead, WTI crude oil is expected to oscillate within a range of $67.55 to $77.95 into February as the market awaits more clarity on Trump's administration policies and fresh fiscal stimulus measures out of China, OANDA's Wong said.