Oil prices decrease because of demand worries and a stronger U.S. dollar

Oil prices fell about 1 percent in early trade on Wednesday, erasing gains from the previous session ahead of a meeting of OPEC+ members due to fears that a slowdown in global economic development will have a negative effect on gasoline demand and a stronger currency.

At 00:20 GMT, Brent oil futures fell 94 cents, or 0.9%, to $99.60 a barrel, wiping out the previous session's gain.

On Wednesday, after gaining 53 cents on Tuesday, West Texas Intermediate (WTI) oil futures decreased 68 cents, or 0.7%, to $93.74 a barrel.

The Organization of Petroleum Exporting Countries and its allies, including Russia, convene as OPEC+ on Wednesday. According to OPEC+ sources cited by Reuters last week, the cartel would likely maintain or slightly raise production in September.

Analysts foresee minimal change due to a bleak demand outlook as fears of a recession intensify, and underlined that top producer Saudi Arabia may be loath to boost output at the expense of OPEC+ member Russia, which has been hit with sanctions as a result of the Ukraine issue.

Before the meeting, three participants told Reuters that OPEC+ cut its forecast for an oil market surplus by 200,000 barrels per day (bpd) to 800,000 bpd.

Analysts at ANZ Research noted in a study, "In light of the uncertain economic situation and signs of deteriorating demand, the likelihood that they will announce an increase in output remains low."

Commonwealth Bank analyst Vivek Dhar stated that a number of factors are weighing on the demand outlook, including rising fears of an economic downturn in the United States and Europe, debt distress in emerging market economies, and China's COVID-zero policy, which restricts activity in the world's largest oil importer.

Dhar said in a letter that if global demand worries continue to rise, "we anticipate increased downside risks to our oil price forecast of $100/bbl in Q4 2022."

Supported by remarks from U.S. Federal Reserve officials that hinted at more interest rate hikes to battle inflation, a stronger dollar also affected oil prices, as a stronger dollar makes oil more expensive for holders of other currencies.

The American Petroleum Institute, an industry organization, said that U.S. oil inventories grew by nearly 2.2 million barrels for the week ending July 29, contrary to the predictions of approximately 600,000 barrels.

Inventories of gasoline declined by 200,000 barrels, which was less than what analysts had predicted; nevertheless, inventories of distillate decreased by around 350,000 barrels, contrary to analysts' projections of a rise.

The market will evaluate official data from the U.S. Energy Information Administration (EIA) at 14:30 GMT to corroborate the inventory assessment.