(Reuters)

Oil prices gained two per cent today (February 23) on expectations of steep cuts to Russian production next month, but a stronger dollar and sharper than expected jump in US inventories added to demand concerns.

Brent crude futures rose US$1.60, or two per cent, to US$82.20 a barrel by 1840 GMT, compared with about US$98 a barrel on the eve of Russia’s invasion of Ukraine a year ago.

West Texas Intermediate crude futures (WTI) advanced US$1.50, or two per cent, to US$75.45 a barrel, on track to end a six-session losing streak.

Prices got an early boost from Russia’s plans to cut oil exports from its western ports by up to 25 per cent in March, exceeding its announced production cuts of 500,000 barrels per day.

DOLLAR INDEX ROSE FOR THIRD STRAIGHT SESSION

While a stronger dollar remains a near-term headwind for crude, UBS analysts said they expect lower Russian production and China’s reopening to tighten the oil market and support prices.

The dollar index rose for the third straight session, after minutes on Wednesday from the latest US Federal Reserve meeting showed a majority of Fed officials agreed the risks of high inflation warranted further rate hikes.

A stronger greenback makes dollar-denominated oil more expensive for holders of other currencies, hitting demand. Both oil benchmarks lost more than US$2 in the previous session after release of the Fed minutes.

Oil prices also came under pressure after US government data showed the country’s crude oil inventories rose for the ninth time in a row last week, stoking demand worries.

US crude stockpiles rose by 7.6 million barrels in the week to February 17, the US Energy Information Administration said, more than triple analyst expectations for a 2.1 million-barrel rise.

“With respect to pressure coming from the Federal Reserve on demand and warming weather in the US and Europe there is overall concern about the demand side,” said Tony Headrick, energy market analyst at CHS Hedging.