LONDON—Oil prices edged down Wednesday morning amid receding concerns that a storm in the U.S. Gulf Coast would hinder oil production, as well as a stronger dollar weighing on prices.
Brent crude, the global benchmark, was down 0.77% to $77.57 a barrel on London’s Intercontinental Exchange . On the New York Mercantile Exchange, West Texas Intermediate futures were trading down 1.09% at $69.11 a barrel.
Expectations that Tropical Storm Gordon would morph into a hurricane as it made landfall Tuesday had triggered a surge in oil prices, with Brent nearing the $80-a-barrel threshold.
However, the storm ultimately “weakened considerably and deviated away from oil-producing areas, which as a result has taken the wind out of bulls’ sails this morning,” said Stephen Brennock, an analyst at brokerage PVM Oil Associates Ltd.
Mr. Brennock added that “a firmer dollar also weighed on oil prices.” Dollar-denominated commodities like oil tend to have an inverse relationship with the greenback. The WSJ Dollar Index, which measures the U.S. currency against a basket of 16 of its peers, was up 0.14% midmorning.
But many oil market participants expect prices to continue to be supported in the coming weeks.
“From a technical point of view, this movement appears as a correction, inside a main trend which remains positive,” Carlo Alberto de Casa, chief analyst at ActivTrades, said of oil’s dip.
Prices have been bolstered in recent weeks amid signs that Iranian crude exports are declining at a faster rate than expected, in the run up to November when U.S. sanctions on the country’s oil industry take effect.
“Although the price rise has been driven strongly by speculation recently, making the risk of correction high, the $80 mark is attracting further speculators—so in the short term, there is a risk of the price rising above this threshold,” analysts at Commerzbank wrote in a note Wednesday.
Analysts and investors are looking ahead Wednesday to weekly U.S. oil inventory data from the American Petroleum Institute, an industry group.
Among refined products Wednesday, Nymex reformulated gasoline blendstock—the benchmark gasoline contract—was down 0.56% at $1.98 a gallon. ICE gas oil, a benchmark for diesel fuel, changed hands at $691.75 a metric ton, down 0.93% from the previous settlement.
Write to Christopher Alessi at [email protected]