Oil backs off four-year high as dollar ekes out gains

Oil futures fell nearly two percent in American trade away from four-year highs, as the dollar index scaled August 20 highs, following earlier data from the US, the world's largest energy consumer. 

As of 05:44 GMT, US crude futures due in November fell 2.39% to $74.58 a barrel, while Brent December futures tumbled 1.59% to $84.92, as the dollar index inched up 0.05% to 95.81. 

Earlier US data showed unemployment claims fell 8 thousand in the week ending September 29 to 207 thousand, while continuing claims fell 13 thousand to 1.650 million in the week ending September 22. 

Federal Reserve Governor Randal Quarles spoke about trends in community banks at the Community Banking in the 21st Century conference at the Federal Reserve Bank of St. Louis. 

US Inventories Surge 

The Energy Information Administration released its report on US crude inventories, showing a sharp increase of 8 million barrels in the week ending September 28, adding to the 1.9 million increase in the previous reading, while analysts expected a 1.1 million build, with total stocks now amounting to 404 million barrels, at five-year averages for this time of year. 

Gasoline stocks fell 0.5 million barrels, still 7% above averages, while distillate stocks fell 1.8 million barrels, making them 3% below averages. 

Saudi oil minister Khalid Al Falih said in earlier remarks that recent geopolitical developments support increases in oil prices, adding that recent spikes in prices aren't entirely based on market fundamentals, and pointing to existent oversupplies currently. 

Oil prices are up 25% so far this year as OPEC and Russia carry on their agreement to cut global output to easy a previous supply glut, while the US withdrew from the Iran deal and sanctioned their oil exports. 

US Oil Rig Count 

Baker Hughes, a US oil services company, reported a drop of three rigs in the oil rig count last week to a total of 863 rigs.

US output has recently risen to the second highest in the globe, taking the place of Saudi Arabia while Russia continues at the top with 11.21 million bpd.