Oil rises on weakening dollar, potential supply disruptions

Oil rises on weakening dollar, potential supply disruptions

General view of oil tanks and the Bayway Refinery of Phillips 66 in Linden, New Jersey, U.S., March 30, 2020. REUTERS/Mike Segar

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Sept 15 (Reuters) – Oil prices edged higher on Thursday as the market balanced weak demand with supply disruption amid a looming rail stoppage in the United States, the world’s biggest crude consumer.

Brent crude futures was up by 2 cents to $94. 12 a barrel by 0324 GMT, while U.S. West Texas Intermediate crude rose 18 cents, or 0.2%, to $88.66. The oil price has been pricing in global recession, but even with continued global growth, the oil market would remain strong relative to continuing supply worries,” stated Clifford Bennett (chief economist at ACY Securities) in a note.

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The market has been focussing on the demand side of late but has probably priced too big a fall in actual demand while forgetting supply can still be somewhat problematic, said Bennett.

The increasing likelihood of a U.S. rail stoppage due to an ongoing labour dispute is also adding support to the market. Three unions are currently negotiating for a new contract, which could impact rail shipments. These are critical for product and crude deliveries. read more

The International Energy Agency (IEA) said Wednesday it expects widespread switching from gas to oil for heating purposes, saying it will average 700,000 barrels per day (bpd) in October 2022 to March 2023 – double the level of a year ago. This, along with the general expectation of weak supply growth, helped to boost the market.

But data released by the Energy Information Administration showed U.S. crude and distillate inventories rose more than expected in the most recent week, suggesting weaker fuel demand and putting a lid on oil prices. read more

Meanwhile, expectations of further U.S. interest rate hikes will continue to cloud the market and limit the rebound of oil prices, said analysts from Haitong Futures.

For refineries, TotalEnergies SE (TTEF.PA) cut production at its 238,000 barrel-per-day (bpd) Port Arthur, Texas, refinery because of the planned shutdown of two sulfur recovery units (SRUs) on Wednesday, said sources familiar with plant operations.

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Reporting by Laura Sanicola and Muyu Xu; Editing by Michael Perry and Sam Holmes

Our Standards: The Thomson Reuters Trust Principles.

Laura Sanicola

Thomson Reuters

Reports on oil and energy, including refineries, markets and renewable fuels. Previous work at Euromoney Institutional Investor, and CNN.

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