Crude oil prices rise due to expectations on oversupply

A strong dollar made the dollar-priced crude more expensive and less attractive for buyers holding other currencies.

“We know that the Fed is probably going to raise rates, and the dollar is rallying”, said Carl Larry, head of oil and gas for Frost & Sullivan LP in Houston.

But there are other near-term obstacles for price momentum, including the strong dollar and a persistent overhang of physical oil.

Brent crude for December settlement fell 63 cents to $47.35 a barrel on the London-based ICE Futures Europe exchange. Diesel futures are up 1 percent to $1.5017 a gallon.

It could be until next year before the economic growth and rising demand for gasoline take center stage in the oil market. Dow and S&P 500 futures each added 0.4%.

Global oil production is outpacing demand following a boom in USA shale oil production and after a decision by the Organization of Petroleum Exporting Countries past year not to cut production.

French investment bank Natixis said it had “seen few signs recently indicating a change of tack in the oil markets”, and that “oil prices will remain under pressure as long as the surplus remains in the market”.

The difference was steady at above $6 for oil slated for delivery in December 2016 and above $9 for December 2017 crude. With the mild losses, oil rigs nationwide dropped to their lowest level since June, 2010.

Though Opec’s output in September dipped 60,000 bpd from a month ago to 31.2 million bpd, Saudi Arabia was the only member to rein in supply. The global Energy Agency is scheduled to release its oil market report next week.

Meanwhile, a $3 billion United Arab Emirates project that would boost the country’s production by 100,000 barrels a day is on hold until contractors offer cheaper terms, a UAE oil official said.

On the geopolitical front, traders are monitoring the continuing internal political strife in Libya, which has caused the African oil producer to cut daily production by about 70,000 barrels to 400,000 barrels a day.

Chinese stocks surged for a second day, leading world markets higher on Thursday, as confidence grew that stimulus measures are helping the world’s No. 2 economy to stabilise. Contributing to the growth was a near doubling of production from the former Soviet Union by 2020 (primarily in the Caspian Sea oil fields), new fields in the North Sea, and increases in the offshore regions of West Africa.