Oil Declines as Stronger Dollar Eclipses US Stockpile Drawdown

Oil fell amid pressure from a stronger dollar, with traders largely ignoring a US stockpile report that signaled tighter markets.

(Bloomberg) — Oil fell amid pressure from a stronger dollar, with traders largely ignoring a US stockpile report that signaled tighter markets.

Crude pared all of its earlier gains and closed in negative territory as broader markets’ risk-on sentiment faded and traders rolled over their positions ahead of West Texas Intermediate’s August expiry on Thursday, adding to volatility. The commodity’s drop occurred despite a US stockpile report showing inventories at the largest storage hub, Cushing, fell the most since October 2021 last week. Nationwide stockpiles slid 708,000 barrels, which traders say wasn’t bullish enough to push prices higher.

Russia’s crude shipments fell to a six-month low in the four weeks to July 16. The curbs suggest Moscow is fulfilling a pledge with its partners in the OPEC+ coalition to rein in supplies. Russia said it aims to reduce its third-quarter crude export plans by 2.1 million tons, in line with its previously stated pledge to cut overseas shipments by 500,000 barrels a day in August.

Oil has been buffeted in recent months as investors weigh China’s stuttering recovery against supply cuts by OPEC+ heavyweights Saudi Arabia and Russia, and indications that the Federal Reserve may be close to concluding a cycle of interest-rate hikes. Prices had made a sharp break higher since late June on signs the market may finally be tightening, but are still lower for the year.

To get Bloomberg’s Energy Daily newsletter direct into your inbox, click here.

(A previous version of this story corrected the size of the stockpile drop in the second paragraph.)

More stories like this are available on bloomberg.com