Oil prices slip as dollar scales new peak

Oil prices fell more 1% on Wednesday, pressured by a strengthening dollar and crude storage builds that offset support from U.S. production cuts caused by Hurricane Ian.

Brent crude futures LCOc1 fell $1.08, or 1.3%, to $85.19 per barrel by 0341 GMT, while U.S. West Texas Intermediate (WTI) crude CLc1 futures were down 99 cents, or 1.3%, at $77.51 per barrel.

The dollar hit a fresh two-decade peak against a basket of currencies on the back of rising Treasury yields. A strong dollar reduces demand for oil by making it more expensive for buyers using other currencies.

Asian share markets slid as surging borrowing costs stoked fears of a global recession, spooking investors into the arms of the safe-haven dollar. MKTS/GLOB

With Asian markets tanking due to the surge in bond yields, demand outlooks are darkened amid a possible nearing economic recession, said Tina Teng, an analyst at CMC Markets.

Traders’ focus is not on the supply issues right now as the bond market’s turmoil sunk risk assets, along with a stubbornly high U.S. dollar, which pressured oil prices, Teng added.