Oil prices were on track to notch back-to-back losses on Tuesday, with prices for global and U.S. benchmark crude touching their lowest intraday levels in three weeks as traders continued to weigh prospects for oil demand.
In a report Tuesday, however, the International Energy Agency warned of tighter global supplies ahead as the European Union’s ban on Russian oil goes into effect in early December.
West Texas Intermediate crude for December delivery
fell $87 cents, or 1%, to trade at $85 a barrel on the New York Mercantile Exchange after losing 3.5% on Monday. It touched a low of $84.06.
January Brent crude
declined by 90 cents, or 0.9%, to $92.24 a barrel on ICE Futures Europe after trading as low as $91.53. Prices for the front-month Brent and WTI contracts both tapped their lowest levels since Oct. 25, FactSet data show.
lost 0.9% to $2.5059 a gallon, while December heating oil
traded at $3.5863 a gallon, up 1.2%.
December natural gas
was down by less than a penny at $5.93 per million British thermal units.
The IEA on Tuesday said that more than 1 million barrels a day of Russian oil exports will be upended within weeks, with a European Ban on Russia crude oil imports and a plan to cap prices for Russian crude-oil sales go into effect.
The Paris-based agency also raised its global oil demand forecast for this year by 170,000 barrels a day to 99.8 million barrels a day and for next year by 130,000 barrels a day to 101.4 million barrels a day.
The IEA report followed the release of the Organization of the Petroleum Exporting Countries’ monthly oil report on Monday. OPEC modestly revised lower its forecast for growth in global oil demand by 100,000 barrels a day to 2.5 million barrels a day, while making small tweaks to its supply forecasts and holding off from making changes to its global economic growth forecasts.
Read The Wall Street Journal: Oil Market Faces ‘Considerable Uncertainties,’ OPEC Warns
Oil prices on Tuesday were lower, with Troy Vincent, senior market analyst at DTN, attributing the move to “both physical and financial market developments.”
The dollar is “finding buying interest after nearing a major technical support level…as the euro is bumping up against long-term technical resistance,” he told MarketWatch. “The potential that this proves to be the beginning of the dollar continuing its long-term strengthening trend after a six-week correction is a worry for oil markets.”
The ICE U.S. Dollar index
was down 0.4% at 106.17 in Tuesday dealings, but continues to trade more than 10% higher month to date. Strength in the greenback can pressure dollar-denominated commodity prices, including oil.
U.S. petroleum inventory numbers should be in focus moving through midweek, said Robbie Fraser, manager, global research and analytics at Schneider Electric, in a daily note.
While commercial crude stocks have managed to gain ground recently, that growth has often “come at the expense of further declines” in U.S. Strategic Petroleum Reserves, he said.
The Energy Information Administration will release its weekly U.S. petroleum supply report Wednesday morning. On average, analysts expect the report to show supply declines of 400,000 barrels for crude, 800,000 barrels for gasoline, and 500,000 barrels for distillates, according to a survey conducted by S&P Global Commodity Insights.