Oil futures fell early on Thursday (Nov 3) as the dollar firmed on the US Federal Reserve's (Fed) hawkish stance, but concerns over looming supply risks kept a floor under prices.
Brent crude had shed 44 cents, or 0.5%, to US$95.72 a barrel at 0146 GMT, while US West Texas Intermediate crude futures retreated 59 cents, or 0.7%, to US$89.41.
The benchmarks settled up more than US$1 on Wednesday, aided by another drop in US oil inventories, even as the Fed boosted interest rates by 75 basis points and its chair Jerome Powell said it was premature to think about pausing rate increases.
A strong dollar is dragging down oil, with some market participants also likely booking profits following recent gains, CMC Markets analyst Tina Teng said.
"With the Fed confirming a higher peak in rates, a darkened global economic outlook could continue to pressure the oil futures markets," Teng added.
But global supply risks still loom large.
The European Union's embargo on Russian oil for its invasion of Ukraine is set to start on Dec 5, and will be followed by a halt in oil product imports in February.
Also likely to keep supply tight in the coming months, OPEC producers may struggle to hit previously set output quotas, ANZ analysts said in a note.
Output from the Organization of the Petroleum Exporting Countries fell in October for the first time since June.
On the demand side, any indication of a reopening in China following Covid-19 restrictions could be a "monster pivot", said Stephen Innes, a managing partner of SPI Asset Management.
Source: Reuters