(Reuters) – Oil prices fell slightly in choppy trading on Monday, as a stronger dollar and fears of a recession offset gains stemming from Russia’s plans to deepen oil supply cuts.
US West Texas Intermediate (WTI) crude futures traded at $76.09 a barrel, or 23 cents, or 0.3% lower, while Brent crude futures were down 30 cents, or 0.36%, at $82.86 a barrel at 0411 GMT. .
Both benchmarks closed up more than 90 cents on Friday.
The dollar hovered near a seven-week high on Monday after a series of strong US economic data reinforced the view that the Federal Reserve will have to raise interest rates more and for a longer period.
A fixed dollar makes commodities priced in the US currency more expensive for holders of other currencies.
“Crude oil continues to take the direction from the sentiment in the broader financial markets,” said Vandana Hari, founder of oil market analysis Vanda Insights.
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Fears of Fed hawks returned to the fore on Friday after the personal consumption expenditures (PCE) price index jumped 0.6% last month after rising 0.2% in December.
“If risk aversion continues to grow, crude is likely to come under renewed pressure,” Harry said.
And data from the Energy Information Administration (EIA) showed that in addition to downward pressure, US crude oil inventories rose to the highest level since May 2021 last week.
“The EIA data continues to raise more questions rather than provide clarity on markets,” analysts at consulting firm Energy Aspects said in a note, referring to the sharp revision of supplies in the data that contributed to the build.
On the supply side, Russia plans to cut oil exports from its western ports by up to 25% in March versus February, exceeding previously announced production cuts by 5% of its production for the month.
Oil prices have fallen by about a sixth in the year since February 24, 2022, when Russian forces first marched into Ukraine.
Russia has halted oil supplies to Poland through the Druzhba pipeline, the CEO of Polish refiner PKN Orlen (PKN.WA) said on Saturday, a day after Poland delivered its first Leopard tanks to Ukraine.
Two weeks after the invasion, prices jumped to a record high of nearly $128 a barrel on concerns about supplies, but have since eased on fears of a global economic slowdown.
Separately, investors are preparing for this week’s manufacturing surveys in China to get a clear direction on oil demand. China holds its annual parliamentary meeting from this weekend and will see new economic goals and policies.
“We expect the government to reaffirm the priority of supporting growth and calling for more political support,” Ning Zhang, chief China economist at investment bank UBS, said in a note.
Additional reporting by Mohi Narayan in New Delhi and Sudarshan Varadhan in Singapore
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