Oil dips as Novak says OPEC+ to stand pat and dollar holds gains

Oil declined on Thursday after the dollar strengthened and Russia played down the likelihood of OPEC+ cutting production further.

West Texas Intermediate fell toward $73 a barrel, after rallying for the last three days amid falling US crude inventories and a warning from Saudi Arabia that oil market short sellers should “watch out.”

But the Organization of Petroleum Exporting Countries and its allies are unlikely to take any new steps at their first face-to-face meeting in several months in early June after a recent decision to cut output, Russian Deputy Prime Minister Alexander Novak said in an interview with Izvestia. A stronger dollar also weighed on oil prices, making commodities priced in that currency less attractive.

Crude is down so far this year, with China’s muted economic rebound and tighter US monetary policy combining to weigh on prices. Federal Reserve officials are leaning toward pausing interest rate hikes in June, though they also signaled they’re not yet ready to end their fight against inflation.

US progress on a debt deal, or lack of it, has also roiled markets in recent weeks. Fitch Ratings placed the country’s AAA credit rating on watch — a sign of growing unease about the nation’s ability to avert a first-ever default — hours after House Speaker Kevin McCarthy said there was still time to get an agreement.

The Bloomberg Dollar Spot Index edged higher early Thursday after reaching a two-month high in the previous session.

UBS Group AG expects the oil market to be under-supplied by almost 1.5 million barrels a day in June, with higher demand in the Northern Hemisphere — fueled by the US driving season — and the Middle East, analysts wrote in a report.

“We think investors will return to the oil market as larger inventory draws become visible, thus supporting prices. So, we retain a positive price outlook,” they said. 


  • WTI for July delivery fell 1.3 per cent to $73.35 a barrel at 10:56 a.m. in London.
  • Brent for July settlement was 1.3 per cent lower at $77.35 a barrel.

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