Oil futures recouped some losses on Wednesday, recovering from a 2 percent slide in the previous session, supported by supply concerns stemming from last week’s OPEC+ cut to its production target, though a stronger dollar weighed on sentiment.
Brent crude futures were up 62 cents, or 0.7 percent, at $94.91 a barrel by 1120 GMT after touching a session low of $93.33.
U.S. West Texas Intermediate crude was up 39 cents, or 0.4 percent, at $89.74 after a session low of $88.27.
“There are two dominant forces in the oil market at the moment; the economic outlook being the primary downside risk and OPEC+ the upside,” said OANDA analyst Craig Erlam.
“The latter reasserted itself last week with the 2 million barrel per day cut ... but growth fears are still dominating in the markets, which may stop the price from taking off.”
Last week, the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, together known as OPEC+, decided to cut their output target by 2 million barrels per day (bpd).
U.S. President Joe Biden vowed unspecified “consequences” for relations with Saudi Arabia after the OPEC+ move.
Washington’s response has “amplified the initial impact in the oil market,” said Torbjorn Soltvedt, analyst at risk intelligence company Verisk Maplecroft, adding that the extent of the impact on oil output may be more muted than suggested by the OPEC+ decision.
“Saudi Energy Minister Prince Abdulaziz bin Salman has clarified that the real cut will be lower than the headline 2 million bpd figure due to several member states falling far short of their individual production ceilings.”
Also on the supply side, Russia’s state-owned pipeline monopoly Transneft on Wednesday said it had received notice from Polish operator PERN about a leak on the Druzhba oil pipeline, Interfax reported.
Meanwhile, the U.S. dollar hit a 24-year high against the yen on Wednesday on concerns about inflation and the pace of increases to U.S. interest rates.
A stronger dollar makes dollar-denominated commodities more expensive for holders of other currencies and tends to weigh on oil and other risk assets.
Also on the downside, the International Monetary Fund on Tuesday cut its global growth forecast for 2023 and warned of increasing risk of a global recession.
The U.S. consumer prices report is due on Thursday.
