Oil prices mixed amid weak dollar, US inventory build-up

US commercial crude oil inventories increase 2.3% during week ending Oct. 7.

Oil prices mixed amid weak dollar, US inventory build-up

Oil prices settled mixed on Friday amid a weakening dollar and more-than-expected build-up of US inventories, signaling a fall in demand.

International benchmark Brent crude traded at $94.79 per barrel at 09.21 a.m. local time (0621GMT) for a 0.2% rise from the closing price of $94.57 a barrel in the previous trading session.

American benchmark West Texas Intermediate (WTI), trading at $89.48 per barrel at the same time, increased 0.4% after the previous session closed at $89.11 a barrel.

One of the major reasons for the price fluctuations is the declining dollar, which has made oil cheaper for buyers using other currencies, supporting prices.

The Oct. 5 decision by the Organization of the Petroleum Exporting Countries (OPEC) and Russia, also known as OPEC+, to cut production by 2 million barrels a day starting in November, also continues to support prices.

However, the rise in prices was limited as US commercial crude oil inventories increased 2.3% during the week ending Oct. 7, according to data released by the Energy Information Administration (EIA) on Wednesday.

Inventories rose by around 9.9 million barrels to 439.1 million barrels, more than the market expectation of an increase of around 7.05 million barrels, fueling demand concerns in the country.

Strategic petroleum reserves, excluded in commercial crude stocks, however, fell by 7.7 million barrels to 408.7 million barrels last week, the data revealed. Gasoline inventories increased by 2 million barrels to 209.5 million barrels over the same period.

Global demand growth forecast reduced for 2022 and 2023

Meanwhile, the IEA cautioned in its monthly report on Wednesday against "the relentless deterioration of the economy" and higher prices sparked by the OPEC+ plan to cut supply, which is also slowing world oil demand.

The agency revised down its global demand forecast for 2022 and 2023. "Demand growth has been reduced to 1.9 million bpd in 2022 and to 1.7 million bpd next year, down by 60,000 bpd and 470,000 bpd, respectively, from last month’s report. World oil demand is now forecast to average 101.3 million bpd in 2023," it noted.

Meanwhile, US President Joe Biden and his senior officials have for over a week shown frustration with Saudi Arabia in a public row over global oil production cuts.

The White House said Thursday that the decision by Saudi-chaired OPEC+ to dramatically cut global oil production is tantamount to "moral and military support" for Russia's ongoing war against Ukraine while Secretary of State Antony Blinken said the US is "reviewing" consequences for Saudi Arabia after the decision.