Recession fears push brent oil prices

Oil prospers as the dollar weakens and Hurricane Ian makes landfall in the Gulf of Mexico

Oil prices rallied on Tuesday (September 27) from a nine-month low hit in the previous session, supported by supply disruptions in the US Gulf of Mexico region before Hurricane Ian and a slight drop in the dollar. .

Analysts expect that the Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+, can act to stem the drop in oil prices by cutting supply, which also supported oil prices. The OPEC+ meeting on policy is scheduled for October 5, 2022.

Closing Tuesday's session, the Brent oil contract advanced 2.6% to $86.27 a barrel. On Monday (September 26), the contract fell to a low of $83.65 a barrel, its lowest level since January 2022.

The WTI oil contract added 2.33% to $78.50 a barrel.

Crude oil prices spiked in early 2022, with Brent nearing an all-time high of $147 a barrel in March 2022 in the wake of the Russia-Ukraine conflict, adding to supply concerns. Recession worries, high interest rates and a strong dollar have weighed on oil prices ever since.

“Oil is currently being influenced by financial factors,” said Tamas Varga of oil brokerage PVM. Meanwhile, the recovery, like this morning caused by Hurricane Ian in the US Gulf, is seen as a temporary phenomenon.

The faltering dollar strength, before which the greenback touched a 20-year high, also offered some support. A stronger dollar makes crude more expensive for buyers using other currencies and tends to put pressure on riskier assets.

The supply cuts focused attention on Tuesday providing some support. BP and Chevron said on Monday they would suspend production at offshore rigs in the Gulf of Mexico when Hurricane Ian makes landfall.

The drop in oil prices has fueled speculation that OPEC+ might intervene. Iraq's Oil Minister on Monday said the group was monitoring oil prices and did not want a sharp increase or a sharp drop.

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