(Reuters) – Oil fell on Wednesday, as pledges by Saudi Arabia and Russia to continue crude output cuts to the end of 2023 were offset by demand fears stemming from macroeconomic headwinds.
Brent crude oil futures were down $1.58, or 1.74%, to $89.34 a barrel at 1045 GMT, while U.S. West Texas Intermediate crude (WTI) fell $1.60, or 1.79%, to $87.63 per barrel.
Oil prices remain under pressure from demand fears driven by macroeconomic headwinds.
“Market attention has shifted from the focus on the short term tightness to the implications of interest rates staying higher for longer, the subdued macro environment that entails, and how OPEC+ plans to deal with that when it meets on 26th November,” said Investec analyst Callum Macpherson.
The OPEC+ Joint Ministerial Monitoring Committee (JMMC) will meet online at 1100 GMT on Wednesday. The OPEC+ group is expected to hold its current oil output in the meeting, sources told Reuters.
Saudi Arabia’s energy ministry confirmed on Wednesday it will continue its voluntary 1 million barrel per day (bpd) crude supply cut until the end of this year.
Russia said it will continue its current 300,000 bpd crude export cuts until the end of the year, and will review its voluntary 500,000 bpd output cut, set back in April, in November.
But Russia could be ready to ease its diesel ban in coming days, according to a daily Kommersant report on Wednesday citing unidentified sources.
A strong U.S. dollar could also be weighing on investor sentiment.
The current dollar strength is “a rally that will continue to haunt all markets including oil, even when, as is now, there is a compelling fundamental backdrop,” PVM analyst John Evans said.
As the trade currency of oil, a strong dollar makes oil comparatively expensive for holders of other currencies, which can dampen demand.
Elsewhere, latest purchasing managers’ index data (PMI) showed a score of 47.2 in September for the euro zone, edging higher from 46.7 in August. Anything below 50 implies economic contraction.
Reporting by Robert Harvey, Laura Sanicola and Muyu Xu; Editing by Mark Potter
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