UPDATE 8-Oil falls 2% on risk aversion, dollar strength

Reuters

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    * U.S. dollar index hits 4-week high, weighing on
commodities
    * Investors watch Fed policy meeting for tapering clues
    * Shell Gulf oil transfer facility offline until year-end

 (Updates to settlement)
    By Devika Krishna Kumar
    NEW YORK, Sept 20 (Reuters) - Oil prices fell 2% on Monday
as investors grew more risk averse, which hurt stock markets and
boosted the U.S. dollar, making oil more expensive for holders
of other currencies 
    Brent crude  LCOc1  fell $1.42, or 1.9%, to settle at $73.92
a barrel after sinking to a session low of $73.52. U.S. West
Texas Intermediate (WTI)  CLc1  declined $1.68, or 2.3%, to end
at $70.29 after falling to as low as $69.86.
    The dollar, seen as a safe haven, rose as worries about
Chinese property developer Evergrande's solvency spooked equity
markets and investors braced for the Federal Reserve to take
another step toward tapering this week.  USD/ 
    "As the U.S. dollar is usually a safe haven, its exchange
rate against other currencies strengthens, a development that
supplements the risk aversion environment and affects commodity
prices, especially oil," Rystad Energy’s oil markets analyst
Nishant Bhushan said. 
    "Oil gets more expensive for non-dollar markets and prices
get a hit as a result, a bearish move backed by the stock market
itself in an environment of risk aversion."
    Still, oil drew some support from signs that some U.S. Gulf
output will stay offline for months due to storm damage.
    Brent has gained 43% this year, supported by supply cuts by
the Organization of the Petroleum Exporting Countries and
allies, and some recovery in demand after last year's
pandemic-induced collapse. 
    Losses on Monday were limited due to supply shutdowns in the
U.S. Gulf of Mexico due to two recent hurricanes. As of Friday
producing companies had just 23% of crude production offline, or
422,078 barrels per day.  urn:newsml:reuters.com:*:nS0N2P3045 
    Crude pared its decline on Monday after Royal Dutch Shell
 RDSa.L  said it expects an installation in the Gulf of Mexico
to be offline for repairs until the end of 2021 due to damage
from Hurricane Ida.
    The facility serves as the transfer station for all the
output from the company's assets in the Mars corridor of the
Mississippi Canyon area to onshore crude terminals.  urn:newsml:reuters.com:*:nL4N2QM1JH
    Rystad Energy analyst Artem Abramov estimated the lost
production will remove 200,000 to 250,000 barrels per day (bpd)
of Gulf of Mexico oil supply for several months. The Gulf
contributes about 16% of U.S. oil production, or 1.8 million
bpd.

 (Reporing by Alex Lawler; Additional reporting by Sonali Paul
in Melbourne, and Roslan Khasawneh and Koustav Samanta in
Singapore;  Editing by Marguerita Choy and David Gregorio)
 ((devika.kumar@thomsonreuters.com; +1 646 223 6059; Reuters
Messaging: devika.kumar.thomsonreuters.com@reuters.net))

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