Brent Drops! Dollar Strengthens Oil Prices Tumble at the Start of the Week
Brent crude oil prices slipped in Asian trading on Wednesday (November 5), weighed down by concerns about rising global supply and a strengthening US dollar ahead of the Federal Reserve's monetary policy decision.
The Brent Crude contract fell to around US$64.65 per barrel, down around 0.3% from its previous close. Pressure stemmed primarily from an Energy Information Administration (EIA) report estimating a significant increase in global oil inventories over the past two weeks, as production from the US, Libya, and several OPEC+ members rebounded to a three-month high.
"The market is currently facing a supply glut while demand has yet to fully recover. Rising production from the US and the Middle East exacerbated the correction at the start of the week," said Stephen Innes, energy analyst at SPI Asset Management, as quoted by Reuters.
Brent's decline in Asia was also triggered by a strengthening US dollar, which makes oil more expensive for buyers using other currencies. The dollar index (DXY) rose to its highest level in two weeks after solid US economic data dashed expectations of a swift interest rate cut by the Fed.
Furthermore, hedging activity by Asian importers, particularly from China and Japan, also weighed on prices early in the session. Several refiners reportedly delayed spot purchases due to concerns that prices could fall further following the release of US oil stockpiles data.
"In Asia, pressure stems from the weakening yuan and yen against the dollar. Many large buyers are taking a wait-and-see stance, while seasonal fuel demand has not yet fully recovered," stated the Energy Intelligence Asia daily market report.
Fundamentally, the global oil market faces a delicate balance.
US crude oil production has reached 13.2 million barrels per day—near a record high.
Meanwhile, Russian and Iranian exports remain high despite new sanctions.
On the demand side, the EIA estimates that global consumption in the fourth quarter rose only slightly, with China recording slower economic growth than expected.
This combination has created further selling pressure in the energy market.
Technically, Brent prices are currently moving below their 50-day moving average (MA50) and facing strong resistance in the range of US$65.00–US$65.50 per barrel.
Immediate support: US$64.00–US$63.50 per barrel
Intermediate support: US$63.00 per barrel
Resistance: US$65.00 per barrel
“The oil market is in a consolidation phase. Any extreme dollar movement or change in OPEC+'s stance could be a powerful catalyst,” Bloomberg Energy Review wrote in its report this morning.
Brent oil prices fell in the Asian session due to a combination of a strengthening dollar, rising global inventories, and weak demand from Asia. Technically, the short-term trend remains bearish, with the potential for a test of US$64–US$63 per barrel in the near term.
Source: Newsmaker.id
