Crude oil was down on Tuesday as weaker manufacturing numbers and a stronger Dollar weighed on demand, with Brent crude futures losing 31 cents or 0.5 per cent to trade $64.58 a barrel and the US West Texas Intermediate crude future declining by 33 cents or 0.5 per cent to close at $60.72 per barrel.
In Asia, a private-sector survey showed that Japan’s manufacturing activity shrank in October at the fastest pace in 19 months on a slump in demand in key automotive and semiconductor sectors.
The S&P Global Japan Manufacturing Purchasing Managers’ Index (PMI) slipped to 48.2 in October from 48.5 in September, undershooting the flash reading of 49.3 and hitting the lowest since March 2024.
The Dollar climbed to a fresh four-month high against the euro on Tuesday as doubts were raised about the prospect of another rate cut this year.
A stronger US currency makes dollar-priced assets such as oil more expensive to those holding other currencies.
Meanwhile, the Organisation of the Petroleum Exporting Countries and their allies (OPEC+) decision to pause output hikes in the first quarter of next year could signal the group’s concern about a potential supply glut.
On Sunday, a group of eight OPEC+ agreed to a small oil output increase of 137 barrels per day for December and a pause in increases in the first quarter of next year.
Whilst Saudi Arabia was the main driver behind triple monthly increases earlier this year, it supported Russia’s motion for 2026, arguing that the first quarter will see notable inventory builds across the globe and there would be little incentive to worsen the glut.
The United Arab Emirates (UAE), an OPEC member, on Monday dismissed fears of a glut, with its Energy Minister Suhail Al Mazrouei saying “I’m not going to talk about an oversupply scenario. I can’t see that.”
OPEC+ countries have collectively boosted their quotas by 2.9 million barrels per day this year to date, half of the oil group’s total 5.85 million barrels per day voluntary cuts.
Additionally, the boost to oil prices from the US sanctioning Russian energy companies Lukoil and Rosneft was fading as market analysts noted that come November 21 when the sanctions on other companies that continue to trade with the Russian companies go into force they will likely evaporate, disappear or be pushed out in time.