Oil falls above $1 on demand fears, Saudi confirms cuts until year-end

LONDON, Oct 4 (Reuters) – Oil prices fell on Wednesday on demand fears fueled by macroeconomic headwinds as Saudi Arabia and Russia pledged to continue crude output cuts until the end of 2023.

Brent crude futures were down $1.58, or 1.74%, at $89.34 a barrel at 1045 GMT, while US West Texas Intermediate crude (WTI) was down $1.60, or 1.79%, at $87.63 a barrel.

Oil prices are under pressure due to demand fears driven by macroeconomic interventions.

“From a focus on short-term tightening, the long-term implications of interest rates, the subdued macro environment and how OPEC+ plans to deal when they meet on November 26,” said an Investec analyst. Callum Macpherson.

The OPEC+ Joint Ministerial Monitoring Committee (JMMC) will meet online at 1100 GMT on Wednesday. The OPEC+ group is expected to maintain its current oil output at the meeting, sources told Reuters.

Saudi Arabia’s energy ministry confirmed on Wednesday that it will continue to cut crude supply by 1 million barrels per day (bpd) until the end of the year.

Russia said it would continue its current 300,000 bpd crude export cuts until the end of the year and reconsider its voluntary 500,000 bpd output cut.

But the daily Kommersant reported, citing unidentified sources, that Russia would be ready to ease its diesel ban in the coming days.

A stronger US dollar could also weigh on investor sentiment.

Current dollar strength is “a rally that will continue to haunt all markets, including oil, even if, as now, there is a compelling fundamental backdrop,” PVM analyst John Evans said.

As a trading currency for oil, a strong dollar makes oil relatively more expensive for holders of other currencies, reducing demand.

Elsewhere, the latest Purchasing Managers’ Index (PMI) data for the euro zone showed a reading of 47.2 in September, up from 46.7 in August. Anything below 50 indicates economic contraction.

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