Oil set for third monthly decline as strong dollar weighs

Singapore — Oil prices eased on Friday, heading for a third consecutive monthly decline, as a stronger dollar and weak China data capped gains while rising supply from major producers globally offset the effect of Western sanctions on Russian exports.

Brent crude futures slipped 36c, or 0.55%, to $64.64 a barrel by 4.10am GMT, while US West Texas Intermediate (WTI) crude was at $60.14 a barrel, down 43 cents, or 0.71%.

“A stronger [dollar] weighed on investor appetite across the commodities complex,” ANZ analysts said in a note.

The greenback was boosted after Federal Reserve chair Jerome Powell said on Wednesday a rate cut in December was not guaranteed.

Oil also slipped after an official survey showed China’s factory activity shrank for a seventh month in October.

Both Brent and WTI are set to fall about 3% in October as rising supply is expected to exceed demand growth this year, with oil cartel Opec and major non-Opec producers ramping up output to gain market share.

More supply will also cushion the impact of Western sanctions disrupting Russian oil exports to its top buyers China and India.

Opec+ is leaning towards a modest output boost in December, sources familiar with the talks said ahead of the group’s meeting on Sunday.

The eight Opec+ members have boosted output targets by a total of over 2.7-million barrels a day — or about 2.5% of global supply — in a series of monthly increases.

Meanwhile, crude exports from top exporter Saudi Arabia hit a six-month high of 6.407-million barrels a day in August, data from the Joint Organisations Data Initiative (Jodi) showed on Wednesday, and are set to climb further.

A US Energy Information Administration (EIA) report also showed record production of 13.6-million barrels a day last week.

US President Donald Trump said on Thursday that China had agreed to begin the process of purchasing US energy, adding that a very large-scale transaction may take place involving the purchase of oil and gas from Alaska.

However, analysts remained sceptical as to whether the US-China trade deal will boost Chinese demand for US energy.

“Alaska produces only 3% of total US crude oil output (not significant), and we think Chinese purchases of Alaskan LNG likely would be market driven,”