Oil falls as strong dollar and recession fears weigh
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Oil futures fell on Wednesday as a gloomy economic outlook and a strong dollar outweighed supply concerns stemming from last week's OPEC+ cut to its production target.
Brent crude futures were down $1.42, or 1.5 %, at $92.87 a barrel by 1315 GMT.
U.S. West Texas Intermediate crude was down $1.54, or 1.7%, at $87.81.
OPEC, which together with allies including Russia last week sent prices rising by agreeing to cut supply by 2 million barrels per day (bpd), slashed its demand outlook on Wednesday.
Citing the resurgence of China's COVID-19 containment measures and high inflation, the producer group cut its outlook for growth this year by 460,000 bpd to 2.64 million bpd.
"The world economy has entered into a time of heightened uncertainty and rising challenges", OPEC said in its monthly report.
U.S. President Joe Biden vowed unspecified "consequences" for relations with Saudi Arabia after the OPEC+ move.
Washington's response has "amplified the initial impact in the oil market", said Torbjorn Soltvedt, analyst at risk intelligence company Verisk Maplecroft, adding that the extent of the impact on oil output may be more muted than suggested by the OPEC+ decision.
"Saudi Energy Minister Prince Abdulaziz bin Salman has clarified that the real cut will be lower than the headline 2 million bpd figure due to several member states falling far short of their individual production ceilings."
Also on the supply side, Russia's state-owned pipeline monopoly Transneft on Wednesday said it had received notice from Polish operator PERN about a leak on the Druzhba oil pipeline, Interfax reported.
Meanwhile, the U.S. dollar hit a 24-year high against the yen on Wednesday on concerns about inflation and the pace of increases to U.S. interest rates.
A stronger dollar makes dollar-denominated commodities more expensive for holders of other currencies and tends to weigh on oil and other risk assets.
Pushing prices down further, the International Monetary Fund on Tuesday cut its global growth forecast for 2023 and warned of increasing risk of a global recession.
The U.S. consumer prices report is due on Thursday.
