Oil drops to $ 74 due to US Gulf risk aversion and production

Crude oil storage tanks are seen from above at the Cushing Oil Hub in Cushing, Oklahoma on March 24, 2016. REUTERS / Nick Oxford / File Photo

  • Dollar strengthens, number of US platforms weighs on crude benchmarks
  • Investors Consider Fed Policy Meeting This Week For Tapered Indices
  • US Gulf oil production is gradually returning to the market

LONDON, Sept. 20 (Reuters) – Oil fell more than a dollar a barrel to around $ 74 on Monday as rising risk aversion weighed on stock markets and pushed the US dollar higher, while a The US Gulf’s largest oil production has come back online in the wake of two hurricanes.

The US dollar, seen as a safe haven, rose as concerns over the creditworthiness of Chinese real estate developer Evergrande spooked stock markets and investors braced for the Federal Reserve to take another step towards reduction this week.

“The Far Eastern stock markets and the strong dollar are affecting oil,” said Tamas Varga of oil broker PVM. “Nonetheless, unless all hell breaks loose, the positive sentiment should prevail.”

Brent crude fell $ 1.27, or 1.7%, to $ 74.07 at 9:41 a.m. GMT, after falling to $ 73.75 earlier in the session. US West Texas Intermediate (WTI) fell $ 1.33, or 1.9%, to $ 70.64.

A stronger dollar makes oil denominated in US dollars more expensive for holders of other currencies and generally reflects higher risk aversion, which tends to weigh on oil prices.

Brent has gained 43% this year, supported by supply cuts by the Organization of the Petroleum Exporting Countries and its allies and some recovery in demand after last year’s pandemic-induced collapse.

Oil had received additional support from supply shutdowns in the Gulf of Mexico in the United States due to the two recent hurricanes, but on Friday, producing companies had only 23% of off-line crude production. , or 422,078 barrels per day.

“US production in the Gulf of Mexico, which had been halted following the hurricane, is gradually returning to the market,” said Carsten Fritsch, analyst at Commerzbank.

An increase in the number of rigs in the United States, an early indicator of future production, to its highest level since April 2020 has also kept prices in check.

Reporting by Alex Lawler; Additional reporting by Sonali Paul in Melbourne and Roslan Khasawneh and Koustav Samanta in Singapore; Editing by Tom Hogue and Emelia Sithole-Matarise

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