Oil prices fall for third consecutive month amid strong dollar and ample supply

Oil prices fell on Friday, heading for their third consecutive monthly decline. The rise in oil prices was limited by a strengthening dollar and weak data from China, while increased supply from major global producers offset the impact of Western sanctions on Russian exports, Reuters reports, writes UNN.

DetailsAs of 04:10 GMT (06:10 Kyiv time), Brent crude futures fell by 36 cents, or 0.55%, to $64.64 per barrel. US West Texas Intermediate crude traded at $60.14 per barrel, down 43 cents, or 0.71%.

“The strengthening US dollar has affected investors’ interest in commodities,” ANZ analysts note.

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The dollar strengthened after US Federal Reserve Chairman Jerome Powell said on Wednesday that a rate cut in December was not guaranteed.

Oil also fell in price after an official survey showed that manufacturing activity in China contracted for the seventh consecutive month in October.

Brent and WTI oil prices are expected to fall by approximately 3% in October, amid expectations that supply growth this year will exceed demand growth. The Organization of the Petroleum Exporting Countries (OPEC) and major non-OPEC producers are increasing production to expand their market share.

The increase in supply will mitigate the impact of Western sanctions that disrupt Russian oil exports to its main buyers – China and India.

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OPEC+ is leaning towards a moderate increase in production in December, sources familiar with the talks said ahead of the group’s meeting on Sunday.

Eight OPEC+ members have increased their production targets by a total of more than 2.7 million barrels per day, which is about 2.5% of global supply, as part of a series of monthly increases.

Meanwhile, according to JODI data published on Wednesday, Saudi Arabia’s oil exports, the largest exporter, reached a six-month high of 6.407 million barrels per day in August and are expected to continue to grow.

The US Energy Information Administration (EIA) report also noted a record production volume last week – 13.6 million barrels per day.

US President Donald Trump said on Thursday that China has agreed to start buying American energy, adding that a very large deal involving the purchase of oil and gas from Alaska could be concluded.

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However, analysts remain skeptical as to whether a US-China trade deal will lead to an increase in China’s demand for American energy.

“Alaska produces only 3% of total US crude oil production (a negligible amount), and we believe that China’s purchases of Alaskan LNG are likely to be market-driven,” Barclays analyst Michael McLean noted in his note.