Daily Times

The oil prices fell for the third straight session on Monday amid a firmer dollar and a rise in US crude and fuel inventories.

As of 1410 hours GMT, Brent, the international benchmark for two-thirds of the world’s oil, shed $1.19 (-1.35 percent) to reach $86.70 a barrel. On the other hand, the US West Texas Intermediate (WTI) price reached $83.73 a barrel, down by $1.41 (-1.66 percent).

The price for Opec Basket was recorded at $88.55 a barrel with a gain of 0.06 percent, Arab Light was available at $88.04 a barrel with an increase of 1.62 percent and the price of Russian Sokol jumped to $90.17 a barrel with a increase of 1.52 percent.

Oil prices were hit by a stronger dollar as the Federal Open Market Committee (FOMC) of the US Federal Reserve is holding a two-day meeting starting Tuesday. The next few trading sessions could be difficult for energy traders as oil prices may move more so on investor positioning ahead of Wednesday’s FOMC policy decision and over a handful of brewing geopolitical risks, that include Russia-Ukraine tensions, Iran nuclear talks, and developments with global handling over North Korea.

The American Petroleum Institute reported last week that inventory build will be 1.404 million barrels this week after analysts predicted a draw of 1.367 million barrels.

However, crude oil futures rebounded in early trade on Monday following a US advisory for its citizens to leave Ukraine. The US Department of State on January 24 authorised government employees and ordered family members of its embassy staff in Ukraine to leave the country citing rising tension.

There is an obvious fear premium in the crude complex especially on account of the latest escalation of tensions between the US and Russia, on account of Ukraine.

Oil prices have risen by more than 10 percent in 2022 so far amid concerns over weather and geopolitical supply concerns in Canada, Kazakhstan and Libya. The underlying supply concerns are also strong, as OPEC+ has been falling short of their monthly targets and the global spare capacity and inventory cushion is also thin. OPEC members, which are subject to production targets, pumped some 620,000 b/d below their combined caps in December, equivalent to a compliance rate of 117 percent.