Crude pauses rally on profit-taking, stronger dollar

Crude oil futures were lower midmorning Sept. 29 as investors booked profits following an overnight rally, while a stronger dollar and higher US crude stocks added further headwinds to energy prices.

At 10:30 am Singapore time (0230 GMT), the ICE November Brent futures contract was down 98 cents/b (1.24%) from the previous close at $78.11/b, while the NYMEX November light sweet crude contract was 83 cents/b (1.10%) lower at $74.46/b.

"Crude prices turned negative after $80 oil triggered some profit-taking and a surge in Treasury yields delivered a stronger dollar," said OANDA's Senior Market Analyst, Edward Moya in a note Sept. 29.

Sharing similar sentiment, many analysts also pointed out that weak sentiments for oil prices followed from the risk-off mood in the US market and a stronger dollar has put a cap in gains of oil prices after hitting its resistance at $80/b.

Front-month Brent on Sept. 28 settled above $80/b for the first time since October 2018. The November contract pushed to a session high of $80.75/b in overnight trading, before falling back.

NYMEX October RBOB was 2.41 cents lower at $2.1778/gal and October ULSD was down 1.91 cents at $2.2699/gal.

Meanwhile, as supplies remain tight, market watchers will look to the upcoming OPEC+ meeting on Oct. 4 for clues on whether the group will expand upon its existing agreement of increasing production by 400,000 b/d.

"While the supply backdrop has not changed much, oil prices hitting $80/b would see pressure building for OPEC+ nations to increase their production quota in the upcoming meeting," said ANZ research analysts on a note Sept. 29.

In inventory news, the American Petroleum Institute reported late Sept. 28 that US crude supplies rose by 4.1 million barrels for the week ended Sept. 24, defying most expectations for a decline. US gasoline inventories rose 3.6 million barrels in the week, while distillate stocks were up 2.5 million barrels, the API said.

The market will now look to the US Energy Information Administration's stocks report due for release later Sept. 29 for further pricing cues.