Oil prices fell by more than 1.6% on Wednesday, pressured by a strengthening dollar and crude storage builds that offset support from US production cuts caused by Hurricane Ian.
Brent crude futures fell $1.28, or 1.48%, to $84.99 per barrel by 05:56 GMT, while the US West Texas Intermediate (WTI) crude futures were down 1.19 cents, or 1.52%, at $77.31 per barrel.
The dollar hit a fresh two-decade peak against a basket of currencies on the back of rising Treasury yields. A strong dollar reduces demand for oil by making it more expensive for buyers using other currencies.
Asian share markets slid as surging borrowing costs stoked fears of a global recession, spooking investors into the arms of the safe-haven dollar.
“With Asian markets tanking due to the surge in bond yields, demand outlooks are darkened amid a possible nearing economic recession,” said Tina Teng, an analyst at CMC Markets.
US Dollar hovers near two-decade peak as investors gear up for Fed
“Traders’ focus is not on the supply issues right now as the bond market’s turmoil sunk risk assets, along with a stubbornly high US dollar, which pressured oil prices,” Teng added.
The US crude oil stocks rose by about 4.2 million barrels for the week ended Sept. 23, while gasoline inventories fell by about 1 million barrels, according to market sources on Tuesday, citing figures from industry group the American Petroleum Institute.
