Oil prices dropped for the fourth consecutive day on Tuesday on a stronger US dollar and concerns over potential interest rate hikes amid mixed signals for crude supplies.
Brent crude futures fell 1.1% to $89.8 a barrel as of 10:05 pm GST, while the US West Texas Intermediate (WTI) crude slid 0.9% to $88.1 around the same time.
"(Brent) crude oil prices slid to (around) $90 a barrel as rising US yields and a stronger US dollar dominated market sentiment," a Reuters report said, citing ANZ analysts as saying in a client note. "While supply remains tight, higher interest rate means expensive storage of inventories. This could lead to further destocking of oil inventories while increasing spot availability."
Citigroup Inc. expects Brent to fall to the low $70s per barrel next year.
The greenback rose Monday to a 10-month high against a basket of other currencies as investors await more clarity on the Federal Reserve's interest rate policy. A strengthened dollar also makes oil more expensive for holders of other currencies.
Federal Reserve Chief Jerome Powell appeared at a roundtable discussion Monday, but he didn't comment on the near-term outlook for rates or the economy.
Fed officials signaled that high rates are likely to persist. On Friday, Federal Reserve Bank of New York President John Williams suggested that while the central bank may halt further interest rate hikes, policymakers would maintain high rates for an extended period to achieve the 2% inflation target.
JPMorgan Chase & Co. CEO Jamie Dimon sees the possibility of interest rates climbing to higher levels.
Higher US interest rates could take a toll on economic growth and dampen oil demand.
On Sunday, the World Bank maintained its forecast for China's 2023 economic growth at 5.1% but cut its projection for 2024 due to persistent weakness of its property sector.
The latest manufacturing data showed the eurozone and Britain are still in a downturn in September.
Türkiye is set to resume operations on a pipeline from Iraq, which had been halted for about six months, Energy Minister Alparslan Bayraktar told the ADIPEC conference in Abu Dhabi on Monday. The move is expected to contribute nearly half a million barrels to the global supply.
Separately, Saudi Arabia could begin to ease its additional voluntary supply cut of 1 million barrels per day (bpd), a Reuters report said, citing ING analysts said in a note.
OPEC and its allies, known as OPEC+, will meet Wednesday but are unlikely to change their current oil output policy. OPEC oil output rose for a second straight month in September despite Saudi Arabia's cuts, according to a Reuters survey.
