Oil Falls Below $75 on Risk-Averse Mood, US Gulf Output

FILE PHOTO: The sun sets behind the chimneys of the Total Grandpuits oil refinery, southeast of Paris, France, March 1, 2021. REUTERS/Christian Hartmann
FILE PHOTO: The sun sets behind the chimneys of the Total Grandpuits oil refinery, southeast of Paris, France, March 1, 2021. REUTERS/Christian Hartmann
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Oil Falls Below $75 on Risk-Averse Mood, US Gulf Output

FILE PHOTO: The sun sets behind the chimneys of the Total Grandpuits oil refinery, southeast of Paris, France, March 1, 2021. REUTERS/Christian Hartmann
FILE PHOTO: The sun sets behind the chimneys of the Total Grandpuits oil refinery, southeast of Paris, France, March 1, 2021. REUTERS/Christian Hartmann

Oil dropped more than $1 a barrel to below $75 on Monday as rising risk aversion weighed on stock markets and boosted the US dollar, while more US Gulf oil output came back online in the wake of two hurricanes.

The dollar rallied to its highest in a month on Monday as pending catastrophe at developer China Evergrande added to a cautious mood and as investors braced for the Federal Reserve to take another step towards tapering this week, Reuters reported.

"Far East stock markets and the strong dollar are affecting oil," said Tamas Varga of oil broker PVM. "Nonetheless, unless all hell breaks loose, the positive sentiment ought to prevail."

Brent crude fell 76 cents, or 1%, to $74.58 at 0815 GMT, having dropped as low as $74.26 earlier in the session.

US West Texas Intermediate (WTI) declined 89 cents, or 1.2%, to $71.08.

A stronger dollar makes US dollar-priced oil more expensive for holders of other currencies and generally reflects higher risk aversion, which tends to weigh on oil prices.

Brent has gained 44% this year, supported by supply cuts by the Organization of the Petroleum Exporting Countries and allies and some recovery in demand after last year's pandemic-induced collapse.

Oil had gained additional support from supply shutdowns in the US Gulf of Mexico due to the two recent hurricanes, but as of Friday producing companies had just 23% of crude production offline, or 422,078 barrels per day.

"US production in the Gulf of Mexico, which had been shut down as a result of the hurricane, is gradually returning to the market," said Carsten Fritsch, analyst at Commerzbank.

A rise in the US rig count, an early indicator of future output, to its highest since April 2020 also kept a lid on prices.



Oil Prices Steady as Expected OPEC+ Output Increase Offsets Canada Supply Pressure

FILE PHOTO: A worker walks at Rumaila oil field in Basra, Iraq, November 28, 2017. REUTERS/Essam Al-Sudani/File Photo
FILE PHOTO: A worker walks at Rumaila oil field in Basra, Iraq, November 28, 2017. REUTERS/Essam Al-Sudani/File Photo
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Oil Prices Steady as Expected OPEC+ Output Increase Offsets Canada Supply Pressure

FILE PHOTO: A worker walks at Rumaila oil field in Basra, Iraq, November 28, 2017. REUTERS/Essam Al-Sudani/File Photo
FILE PHOTO: A worker walks at Rumaila oil field in Basra, Iraq, November 28, 2017. REUTERS/Essam Al-Sudani/File Photo

Oil prices held steady on Wednesday as concern around the OPEC+ groups next output increase were offset by Canadian supply pressures due to wildfires there, while global trade tensions continue to linger.

Brent crude futures inched 18 cents lower, or down around 0.3%, at $65.45 a barrel by 0905 GMT, while US West Texas Intermediate crude was 19 cents lower, also down 0.3%, at $63.22 a barrel.

The unwinding of 411,000 barrels per day (bpd) in July by OPEC+ states was weighing on the market, Janiv Shah, vice president of oil commodity markets analysis at Rystad Energy said, but there was some support from the removal of Canada's 344,000 bpd production due to the wildfires.

Both benchmarks climbed about 2% on Tuesday to a two-week high, driven by worries over supply disruption and expectations that Iran would reject a US nuclear deal proposal key to easing sanctions on the major oil producer, Reuters reported.

"Geopolitical tensions are simmering in the background, with risks to fundamentals skewed to the upside, as Russian and Iranian oil exports remain elevated," Barclays analyst Amarpreet Singh said in a research note late on Tuesday.

US President Donald Trump and Chinese leader Xi Jinping are likely to speak this week, days after Trump accused China of violating a deal to roll back tariffs and trade curbs.

On Tuesday, the Organisation for Economic Co-operation and Development (OECD) cut its global growth forecast as the fallout from Trump's trade war takes a bigger toll on the US economy.