Oil Prices Stable on Output Outages in U.S.

Oil prices were broadly stable on Wednesday as pressure from a strengthening dollar and crude storage builds was offset by U.S. production cuts caused by Hurricane Ian.

Brent crude futures were up 0.3% at $86.56 U.S. per barrel, while U.S. West Texas Intermediate (WTI) crude futures added 0.4% to trade at $78.85 per barrel. Both contracts erased earlier falls after rising over 2% in the previous session.

In the Gulf of Mexico, about 190,000 barrels per day of oil production, or 11% of the Gulf’s total, were shut-in due to Hurricane Ian.

But the dollar hit a fresh two-decade peak against a basket of currencies on Wednesday as rising global interest rates fed recession concerns. A strong dollar reduces demand for oil by making it more expensive for buyers using other currencies.

U.S. crude oil stocks rose about 4.2 million barrels for the week ended Sept. 23, while gasoline inventories fell about one million barrels, according to market sources on Tuesday, citing figures from industry group the American Petroleum Institute.

In addition, Goldman Sachs cut its 2023 oil price forecast on Tuesday, due to expectations of weaker demand and a stronger U.S. dollar, but said global supply disappointments only reinforced its long-term bullish outlook.