Oil down on strong US dollar as investors await OPEC meeting

By Sibel Morrow and Duygu Alhan

Oil prices decreased on Tuesday over the rising value of the US dollar, despite supply woes ahead of a highly anticipated meeting of OPEC-producing countries on Wednesday.

International benchmark crude Brent traded at $90.25 per barrel at 10.26 a.m. local time (0726 GMT), a 0.51% loss from the closing price of $90.71 a barrel in the previous trading session on Monday.

The American benchmark West Texas Intermediate (WTI) traded at the same time at $88.22 per barrel, down 0.67% from Monday's close of $88.82 per barrel.

The dollar strengthened earlier on Monday as a result of the US government's decision to avert a shutdown over the weekend, driving up oil costs for holders of foreign currencies and driving down prices for many others.

Investors are now monitoring the Fed's formal announcements to look for clues about the US central bank's upcoming interest rate moves.

US Federal Reserve Governor Michelle Bowman said Monday that high energy prices could reverse recent progress seen in inflation.

"Most recently, the latest inflation reading based on the personal consumption expenditure (PCE) index showed that overall inflation rose, responding in part to higher oil prices," Bowman said during her speeches at the Mississippi Bankers Association and the Tennessee Bankers Association held in Banff, Canada.

Both benchmarks reached their highest levels since November 2022 in September, with Brent reaching over $97 per barrel after Saudi Arabia and Russia announced plans to reduce output for the following three months, fueling concerns that the supply-demand gap was closing.

Market players are now focused on the upcoming OPEC group's Joint Ministerial Monitoring Committee (JMMC) on Wednesday amid expectations of a rollover of the group’s ongoing supply cuts.

Easing supply concerns, Türkiye on Monday announced its decision to restart oil flow on a pipeline that transports Iraqi crude from Kirkuk to export facilities in Ceyhan on the Turkish Mediterranean coast.

Turkish Energy Minister Alparslan Bayraktar said 500,000 barrels of oil per day would be supplied to global markets this week.