Crude oil futures were steady to lower in mid-morning trade in Asia Oct. 1 amid a stronger dollar, while the outlook remained bullish in the lead-up to an OPEC+ meeting scheduled for Oct. 4.
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At 10:30 am Singapore time (0230 GMT), the ICE December Brent futures contract was down 14 cents/b (0.18%) from the previous close at $78.17/b, while the NYMEX November light sweet crude contract was 12 cents/b (0.16%) lower at $74.91/b.
"Crude prices are entering into consolidation mode as energy traders await the OPEC+ meeting on output," OANDA Senior Market Analyst Edward Moya said in a note Oct. 1, adding the strengthening dollar was also impacting oil prices.
OPEC+ will meet Oct. 4 to discuss whether to expand its existing agreement of increasing production by 400,000 b/d. The group has recently come under pressure for capping its monthly production increases at 400,000 b/d amid an increase in global demand.
ING research analysts in a note Oct. 1 said it was safe to assume given the current environment that an increase of at least 400,000 b/d was guaranteed for November, adding the greater uncertainty was whether the group would be willing to ease production caps more aggressively.
The stronger dollar was adding headwinds to oil prices. The dollar index stood at 94.32 at 0230 GMT, up 0.1% from the previous close. A stronger dollar makes dollar-denominated assets such as oil more expensive for buyers holding foreign currency, thus dampening demand.
Despite the dip in crude oil prices in early Asian trade, several analysts noted that fundamental remained bullish. The Chinese government has asked state-owned energy companies to build and ensure adequate reserves to meet power needs for winter, which had seen crude prices end higher Sept. 30.
"This has suggests that the already very elevated LNG and thermal coal prices could be further bid up by Chinese buying, which will in turn be supportive for oil prices," the ING research analysts said.
Reflecting similar sentiment, ANZ research analysts noted that refinery offtake continued to remain strong amid attractive margins, while China was preparing to buy more energy to avoid a supply crunch.