Oil falls more than 2 dollars on demand fears, Saudi Arabia confirms cuts until the end of the year

LONDON, Oct 4 (Reuters) – Oil fell on Wednesday as pledges by Saudi Arabia and Russia to continue crude production cuts until the end of 2023 were offset by demand fears stemming from macroeconomic headwinds.

Brent crude oil futures were down $2.02, or 2.22%, at $88.90 a barrel by 1228 GMT, while U.S. West Texas Intermediate (WTI) crude fell $2.10, or 2.35%, to $87.13 a barrel.

The online meeting of OPEC+’s Joint Ministerial Monitoring Committee (JMMC) on Wednesday left the group’s production policy unchanged, two sources said as the meeting took place.

The JMMC will next meet on November 26, according to a statement.

Oil prices remain under pressure on demand fears driven by macroeconomic headwinds.

“Market attention has shifted from the focus on short-term constraints to the implications of interest rates staying high for longer, the dovish macroeconomic environment this implies and how OPEC+ plans to deal with that when the meeting meets. November 26,” said the Investec analyst. Callum Macpherson.

Saudi Arabia’s Energy Ministry confirmed on Wednesday that it will continue with its voluntary level of 1 million barrels per day (bpd). crude oil supply cut until the end of this year.

Russia said it will maintain its current 300,000 bpd cuts in crude oil exports until the end of the year, and will review in November its voluntary production cut of 500,000 bpd, set in April.

Russian Deputy Prime Minister Alexander Novak said joint voluntary cuts by Russia and Saudi Arabia have helped balance oil markets.

Novak also welcomed the positive effect the Kremlin’s diesel and gasoline export ban has had on the domestic market, adding that the government continues to monitor fuel prices in Russia.

Earlier Wednesday, the Kommersant newspaper reported that Russia could be ready to relieve its diesel ban in the coming days, citing unnamed sources.

A strong US dollar could also be weighing on investor confidence.

The current dollar strength is “a rally that will continue to haunt all markets, including oil, even when, as now, there is a compelling fundamental backdrop,” said PVM analyst John Evans.

As the currency of oil trading, a strong dollar makes oil comparatively more expensive for holders of other currencies, which can dampen demand.

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