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Oil futures fell Thursday, with the U.S. benchmark trading at its lowest since Aug. 4 as the U.S. dollar bounced and worries remained over the outlook for demand.
West Texas Intermediate crude for October delivery CL.1, -2.00% on the New York Mercantile Exchange dropped 98 cents, or 2.4%, to trade at $40.53 a barrel. November Brent BRNX20, -1.93%, the global benchmark, declined 96 cents, or 2.2%, to $43.47 a barrel on ICE Futures Europe.
Data showing a fall in gasoline demand was blamed in part for crude’s fall on Wednesday despite a large drop in oil inventories. Meanwhile, a rebound by the U.S. dollar limited upside for commodities. Oil had previously found support as the ICE U.S. Dollar Index DXY, +0.04%, a measure of the U.S. currency against a basket of six major rivals, fell to a more-than-two-year low earlier in the week.
“The macro picture has started to send more mixed signals to the oil market, with strength in equity markets more and more concentrated on a few indices/industries, key government bond interest rates trending lower and the U.S. Dollar index in rebound mode after the EUR/USD exchange rate hit the $1.20 level two days ago,” wrote analysts at JBC Energy, in a note.
A weaker dollar can be beneficial to commodities, making them less expensive to users of other currencies. A stronger dollar can put pressure on commodity prices.
Weakness was also attributed to a report by Bloomberg that Iraq may seek a two-month extension to its deadline for implementing additional production cuts as part of the OPEC+ agreement. Iraq and other countries that had overproduced their quotas earlier this summer, are required to make deeper cuts to compensate.
October gasoline RBV20, -1.39% fell 1.4% to $1.1852 a gallon, while October heating oil HOV20, -2.86% declined 3% to $1.1529 a gallon.
October natural gas NGV20, +0.80% rose 1.3% to $2.518 per million British thermal units.
