Crude Oil Prices Fall As Markets Reassess Supply Cuts

Crude oil prices declined on Wednesday after a strong rally on Tuesday in response to supply cuts by Saudi Arabia and Russia that unexpectedly extended supply cuts to the end of the year. Despite the pre-announced cuts, markets now expect the decision to be subject to periodic review by the two major oil producing countries.

The Dollar’s recent strength, amidst hawkish comments by Fed officials also weighed on crude oil prices. Though the Dollar shed some gains on Wednesday it still remains near 6-month highs, as concerns about the health of the global economy deepened a risk-off sentiment.

Anxiety ahead of release of China’s trade data on Wednesday and inflation data on Friday also generated a bearish sentiment for the black liquid.

Brent Oil Futures for November settlement which had finished Tuesday’s trading at $90.04, ranged between $90.33 and $89.25 on Wednesday. It is currently trading at $89.50, having shed 0.6 percent from the previous close.

West Texas Intermediate Crude Oil Futures for October settlement declined 0.55 percent from the previous close of $86.69 to trade at $86.21. Prices ranged between a high of $87.00 and a low of $85.94 on Wednesday.

Industry level crude oil inventory data is slated for release later in the day by the American Petroleum Institute. Markets expect the crude oil inventories in the U.S. to shrink by 1.43 million barrels in the week ended September 1. Crude oil inventories had plunged by 11.5 million barrels in the previous week. Official data by the Energy Information Administration is also expected to show a decline of 1.3 million barrels in inventories during the period.

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