Oil fell, halting a four-session run of gains, pressured by a strong dollar and a backdrop of oversupply.
West Texas Intermediate fell 0.8% to settle below $61 a barrel on Tuesday. A global equities rally hit a speed bump amid concerns about lofty valuations while the greenback climbed to the highest in more than five months, weighing on crude and other dollar-denominated commodities.
Oil declined because of “the dollar funding stress and the second-order effect on global liquidity and, in turn, global growth,” said Jon Byrne, an analyst at Strategas Securities.
The Organization of the Petroleum Exporting Countries and its allies said over the weekend they planned to hold back from lifting production quotas in the first quarter. The decision came as market observers brace for what is expected to be a global crude glut.
The US oil benchmark has retreated almost 16% this year as OPEC+ and non-member nations ramped up production. Prices rebounded from five-month lows when the US recently announced sanctions on Rosneft PJSC and Lukoil PJSC, Russia’s two biggest oil companies, but have since surrendered some of those advances.
Russian seaborne crude shipments fell sharply in the wake of the sanctions, dropping by the most since January 2024, according to data tracked by Bloomberg. Cargo discharges have been hit even harder than loadings, with oil held in tanker ships surging.
Still, some are skeptical the restrictions will stop Russian oil from finding buyers.
“Down the line, you will see that more and more of the disrupted Russian oil, one way or another, finds its way to the market,” Torbjörn Törnqvist, chief executive officer of Gunvor Group, said during an interview on Tuesday. “It always does somehow.”
Eni SpA CEO Claudio Descalzi said Monday that any concerns about oversupply will be short-lived, the latest comments by an oil executive to soothe worries about weak demand. The leader of Diamondback Energy Inc., the largest independent crude driller in the Permian Basin, said he’s content with little to no production growth at his company for now.
Oil Prices
WTI for December delivery slipped 0.8% to settle at $60.56 a barrel in New York.
Brent for January settlement fell 0.7% to settle at $64.44.
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