Oil prices dropped on Friday on the back of the market expectation that the current gas crisis may spur the oil producing countries to boost their production while a more expensive US dollar also discouraged the investors.
International benchmark Brent crude was trading at $77.80 per barrel at 0701GMT for a 0.65% decrease after closing Thursday at $78.31 a barrel.
American benchmark West Texas Intermediate was at $74.52 per barrel at the same time for a 0.67% drop after it ended the previous session at $75.03 a barrel.
Being mostly on a rising trend during September and reaching a three-year-high level after briefly hitting a little over $80 a barrel, oil prices started the month of October down with supply concerns.
After recovering from coronavirus-induced demand shortfalls, the oil markets are now bracing for a supply crisis as the oil demand rebounded from historic lows but the supply has shown signs of lagging.
The Organization of the Petroleum Exporting Countries and allies led by Russia, known as OPEC+, will hold their meeting to review their output policy on Oct. 4. They are expected to boost their output as the gas price problem particularly in Europe may raise demand for alternative fuels, forcing electricity companies to switch to use oil instead of gas in power generation.
The increasing US dollar index also exerted pressure on oil prices, discouraging investors to purchase dollar-indexed crude oil.
The US dollar index, which measures the value of the American dollar against a basket of currencies including the Japanese yen, British pound, Canadian dollar, Swedish krona and Swiss franc, reached $94.27.
Raising demand concerns, commercial crude oil stocks in the US, the world's largest oil consumer, rose contrary to the expectations and weighed on the prices.
US commercial crude oil inventories increased by 1.1% for the week ending Sept. 24, according to the latest data released by the Energy Information Administration.
Inventories increased by 4.6 million barrels, contrary to the market expectation of a fall of 2.3 million barrels.
Gasoline inventories also increased by 200,000 barrels to 221.8 million barrels over the same period.
By Sibel Morrow