Oil Prices Rise on Surprising Drop in US Crude Oil, Fuel Inventories; dollar weakness

NEW YORK, Sept. 28 (Reuters) – Oil prices rose Wednesday after unexpected falls in US oil and fuel inventories, and as the US dollar pulled back from recent gains, commodity prices rose.

Brent crude futures were up $2.82, or 3.3%, to $89.09 a barrel at 12:31 a.m. EST (1631 GMT). US West Texas Intermediate (WTI) crude futures were up $3.20, or 4.1%, to $81.70 a barrel.

The dollar hit another two-decade high against a basket of currencies on Wednesday before pulling back. A strong dollar reduces the demand for oil by making it more expensive for buyers who use other currencies. In the early afternoon hours in the US, the dollar index fell 0.9%.

“These are all dollar-driven rallies across the board,” said Eli Tesfaye, senior market strategist at RJO Futures. “All commodity-dominated currencies have risen — crude oil isn’t just moving in isolation here.”

US crude inventories fell 215,000 barrels last week, while gasoline inventories fell 2.4 million barrels and distillate inventories 2.9 million barrels as refining activity declined after several interruptions.

Product landings rose in the past week as demand recovered after several weeks of weakness. Refining activity declined, but refineries are still running at 90.6% of total capacity in the United States, the highest for this time of year since 2014, for both domestic and export demand.

“If we can hold onto these gains, it will look like the market has bottomed out a little bit here,” said Phil Flynn, an analyst at Price Futures Group.

According to US government figures, about 190,000 barrels per day of oil production in the Gulf of Mexico, or 11% of the total in the Gulf, was shut down as a result of Hurricane Ian. Wholesale gasoline prices have also risen in the United States after refineries in the Midwest and West Coast closed.

Goldman Sachs cut its 2023 oil price forecast on Tuesday on expectations of weaker demand and a stronger US dollar, but said disappointments in global supply only bolstered the long-term bullish outlook.

Global equities hit their lowest level in two years on Wednesday after the Bank of England said it would enter the bond market to stem a damaging rise in borrowing costs, dampening investor fears of contagion in the financial system. .

Reporting by David Gaffen; additional reporting by Shadia Nasralla in London; Editing by Lisa Shumaker and David Gregorio

Our Standards: The Thomson Reuters Trust Principles.