US supply curbs, pause in dollar rally give crude a breather

Front-month ICE Brent has inched down by $0.40/bbl in the past day, to $85.60/bbl at 09.00 GMT.

PHOTO: Analysts expect OPEC+ to take action to stem the drop in prices by cutting supply at its 5 October meeting. Getty Images

Upward pressure:

Supply curbs in the US Gulf of Mexico ahead of Hurricane Ian have propped up Brent. Oil majors BP and Chevron have suspended output from four offshore platforms in the US Gulf of Mexico as a precaution ahead of the incoming Category 3 hurricane. Ian is forecast to strengthen into a Category 4 hurricane before making landfall in Florida later this week.

Iraq's Oil Minister Ihsan Abdul Jabbar said OPEC and its allies, such as Russia, are monitoring oil price developments to maintain market equilibrium. “We entered a challenging period. Global factors led to the decrease, most importantly lower growth and higher inflation rates,” he added

OPEC may be “forced” to make an additional output cut if crude prices fall below current levels, Nigerian oil minister Timipre Sylva said in an interview with Bloomberg.

Downward pressure:

Several Federal Reserve officials have said more interest rate hikes could be in store, but they would come at the expense of slowing the economy. Fed Boston president Susan Collins said additional tightening is needed to rein in stubbornly high inflation, while Cleveland Fed President Loretta Mester called for a restrictive policy to curb “unacceptably high” inflation.

A new report released yesterday by the Organization for Economic Co-operation and Development (OECD) warns that global economic growth could slow next year and spark a recession. OECD has downgraded its global economic growth forecast for next year from 2.8% to 2.2% in response to a "subdued" global economic growth in 2022 and a decline in 2023.

By Konica Bhatt

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