Oil prices fell more one per cent on Wednesday, pressured by a strengthening dollar and crude storage builds that offset support from U.S. production cuts caused by Hurricane Ian.

Brent crude futures fell $1.08, or 1.3pc, to $85.19 per barrel by 0341 GMT, while US West Texas Intermediate (WTI) crude futures were down 99 cents, or 1.3pc, at $77.51 per barrel.

The dollar hit a fresh two-decade peak against a basket of currencies on the back of rising Treasury yields. A strong dollar reduces demand for oil by making it more expensive for buyers using other currencies.

Asian share markets slid as surging borrowing costs stoked fears of a global recession, spooking investors into the arms of the safe-haven dollar.

“With Asian markets tanking due to the surge in bond yields, demand outlooks are darkened amid a possible nearing economic recession,” said Tina Teng, an analyst at CMC Markets.

“Traders’ focus is not on the supply issues right now as the bond market’s turmoil sunk risk assets, along with a stubbornly high US dollar, which pressured oil prices,” Teng added.

US crude oil stocks rose by about 4.2 million barrels for the week ended Sept 23, while gasoline inventories fell about 1m barrels, according to market sources on Tuesday, citing figures from industry group the American Petroleum Institute.

Distillate stocks rose by about 438,000 barrels, according to the sources, who spoke on condition of anonymity.

The report comes ahead of official Energy Information Administration data due on Wednesday at 4:30pm EDT.

Goldman Sachs cut its 2023 oil price forecast on Tuesday, due to expectations of weaker demand and a stronger US dollar, but said global supply disappointments only reinforced its long-term bullish outlook.

Producers began returning workers to offshore oil platforms after shutting in output ahead of Hurricane Ian, which entered the US Gulf of Mexico on Tuesday and is forecast to become a dangerous Category 4 storm over the warm waters of the Gulf.

About 190,000 barrels per day of oil production, or 11pc of the Gulf’s total were shut-in, according to offshore regulator the Bureau of Safety and Environmental Enforcement (BSEE).

Producers lost 184m cubic feet of natural gas, or nearly 9pc of daily output.

Personnel were evacuated from 14 production platforms and rigs, the BSEE said.

Ian is the first hurricane this year to disrupt oil and gas production in the US Gulf of Mexico, which produces about 15pc of the United States’ crude oil and 5pc of dry natural gas.