Oil prices erased earlier gains and fell on Tuesday morning as a rising U.S. dollar and concerns about demand weighed on market sentiment.
As of 8:40 a.m. EDT on Tuesday, the prompt price of the U.S. benchmark, WTI Crude, was down 1.78% at $67.97. Brent Crude, the international benchmark, was losing 0.98% and traded at $71.42.
Earlier on Tuesday, Brent prices had risen after China reported stronger crude oil imports last month.
The world’s largest crude oil importer saw its imports in August rise by 8 percent month over month. Chinese refiners imported an estimated 10.49 million barrels per day (bpd) of crude in August, up from 9.71 million bpd in July, according to official customs data compiled by Reuters.
The state-owned Chinese oil giants stepped up imports last month to process more crude as fuel oil demand in the country rises.
Despite the bullish crude import news out of China, Brent prices reversed course during the day and dropped in the morning U.S. time as the dollar rose. A stronger dollar makes oil buying more expensive for holders of other currencies.
Oil prices were also weighed down by the deep Saudi cut in its prices for Asia for October, which signaled that the world’s largest oil exporter wants to keep its market share on its most important market, and that Asian demand may not be as strong as expected.
Some support to oil prices came from the continued outages in the U.S. Gulf of Mexico, which continues to struggle to return a significant part of its crude oil production more than a week after Hurricane Ida made landfall in Louisiana on August 29.
As much as 1.526 million bpd of oil production in the U.S. Gulf of Mexico was shut-in as of Monday, according to data from the Bureau of Safety and Environmental Enforcement (BSEE). The shut-in volume represents 83.87 percent of Gulf of Mexico’s oil production.
By Tsvetana Paraskova for Oilprice.com
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