Crude Oil futures fell in Asia’s mid-afternoon trade on September 20 as supply fears faded following an increase in the US rig count despite the recovery in the Gulf of Mexico, as investors awaited additional pricing indications from the US Federal Reserve meeting in the coming days. As a result, the ICE, November Brent futures contract, was down 39 cents (0.52%) from its previous close of $74.95/b at 2 p.m. Singapore time (0600 GMT), while the NYMEX October light sweet crude contract was down 47 cents (0.65%) at $71.50/b.
Edward Moya, OANDA’s senior market analyst, the Americas, said in a note, “After a fourth weekly gain, crude prices slumped after oil rig counts delivered their biggest increase in a month and as risk aversion sent the dollar higher.” Baker Hughes reported the US oil and gas rig count, a measure of future output, at 512 on September 17, up to nine rigs from the previous week and bringing the total to its highest level since April 2020.
The Gulf of Mexico’s the production and refining capacities are continuing to improve. However, the US Bureau of Safety and Environmental Enforcement announced on September 17 that 422,078 b/d of oil production, or 23.19 percent, and 765,540 b/d of gas output, or 34.43 percent, remain offline in the Gulf, down from 66.36 percent of oil production and 75.55 percent of gas production last week.
Prices were also pushed lower by a stronger dollar. The ICE US Dollar Index traded at 93.295 at 2 p.m. Singapore time (0600 GMT), up 0.128 percent from the previous close. A higher dollar makes dollar-denominated assets, such as Crude Oil futures, less appealing to foreign currency investors, cutting demand for these assets.