London — Oil steadied on Thursday as the expectation of weaker demand and a strong dollar ahead of a potentially large interest rate increase balanced supply concerns.
The International Energy Agency said this week that oil demand growth would grind to a halt in the fourth quarter. The dollar held near recent peaks, supported by the expectation the US Federal Reserve will continue to tighten policy.
Brent crude was down 10c, or 0.1%, to $94.00 a barrel at 8.55am GMT. US West Texas Intermediate crude fell 44c, or 0.5%, to $88.04.
“There are many forces dictating the price action in oil markets right now, with economic uncertainty right up there,” said Craig Erlam of brokerage Oanda. “The stronger dollar is potentially another headwind.”
Crude has dropped substantially after a surge close to its record highs in March after Russia’s invasion of Ukraine added to supply concerns, pressured by the prospects of recession and weaker demand.
New clashes between Armenia and Azerbaijan, an oil producer, linked to a decades-old dispute between the ex-Soviet states raised another risk to supply, though a senior Armenian official said on Wednesday a truce had been agreed.
“While challenging the $100 hurdle is currently not a dead cert, it seems that a bottom at around $90 has been found … largely thanks to war-related supply fears,” said Tamas Varga of oil broker PVM.
Oil came under pressure from a strong dollar, which makes dollar-denominated commodities more expensive for other currency holders, ahead of a Federal Reserve meeting next week that could hike interest rates by a jumbo 100 basis points.
US crude inventories rose by a more than expected 2.4-million barrels, data showed on Wednesday — though again boosted by the releases from the Strategic Petroleum Reserve, part of a programme scheduled to end in October.