By Peter Nurse
Investing.com -- Oil prices fell Friday, weighed by the strength of the U.S. dollar and continued speculation that the Biden administration will authorise the release of crude from the U.S. Strategic Petroleum Reserve.
By 9:35 AM ET (1435 GMT), U.S. crude futures were down 1.1% at $80.67 a barrel, while Brent futures fell 0.8% to $82.25, with both contracts on course for a third weekly fall.
U.S. Gasoline RBOB Futures were down 1% at $2.2947 a gallon.
The dollar climbed to a 16-month high earlier Friday, and headed for a weekly gain of around 1%, following the latest inflation release showing consumer prices rising at the fastest annual pace since 1990, increasing the pressure on the Federal Reserve to hike interest rates earlier than expected.
A rising dollar weighs as it makes the commodity more expensive for non-U.S. buyers.
Also causing traders to baulk is continued talk that the U.S. government will move to cool gasoline prices, a political bone of contention, by releasing supply from the country’s strategic reserve.
This follows the Organization of the Petroleum Exporting Countries and its allies, a group of major producers known as OPEC+, rebuffing calls from President Joe Biden, among others, to boost production at a faster rate.
The group agreed earlier this month to stick to its existing pace of easing the record output cuts by just 400,000 barrels a day.
OPEC+ is reluctant to increase supply by more than previously agreed because they see demand stalling in the fourth quarter, weighed by the high energy prices, while the global economic recovery stops being driven by a revival in demand for goods, which in turn has stoked energy demand, toward recovery in demand for services.
Additionally, the group sees strong non-OPEC supply next year, keeping its forecast unchanged at 3.02 million barrels a day.
“It is this continued expectation from OPEC for a better-supplied market next year that is holding them back from easing supply cuts more aggressively in the short term,” said analysts at ING, in a note.
The Baker Hughes’ rig count later will give fresh indications as to whether U.S. producers are accelerating production plans, potentially adding to the future non-OPEC supply.