Oil prices stable as soaring dollar offset by US output outages

Oil prices were broadly stable on Wednesday as pressure from a strengthening dollar and crude storage builds was offset by US production cuts caused by Hurricane Ian.

Brent crude futures were up 5 cents, or 0.06 per cent, at $86.32 per barrel by 0937 GMT, while US West Texas Intermediate (WTI) crude futures were down 9 cents, or 0.1 per cent, at $78.41 per barrel. Both contracts erased earlier falls after rising over 2 per cent in the previous session.

In the Gulf of Mexico, about 190,000 barrels per day of oil production, or 11 per cent of the Gulf's total, were shut-in due to Hurricane Ian, according to offshore regulator the Bureau of Safety and Environmental Enforcement (BSEE).

But the dollar hit a fresh two-decade peak against a basket of currencies on Wednesday as rising global interest rates fed recession concerns. A strong dollar reduces demand for oil by making it more expensive for buyers using other currencies.

US crude oil stocks rose about 4.2 million barrels for the week ended September 23, while gasoline inventories fell about 1 million barrels, according to market sources on Tuesday, citing figures from industry group the American Petroleum Institute.

Distillate stocks rose by about 438,000 barrels, according to the sources. The report comes ahead of official Energy Information Administration data due 1430 GMT.

Goldman Sachs cut its 2023 oil price forecast on Tuesday, due to expectations of weaker demand and a stronger US dollar, but said global supply disappointments only reinforced its long-term bullish outlook.

An upcoming price catalyst will be producer group OPEC+'s October 5 meeting at which Russia is likely to propose an output cut of around 1 million barrels per day, a source familiar with the Russian viewpoint said on Tuesday.