Global oil markets extended their losses on Friday, deepening Thursday’s sharp decline as concerns over oversupply and a potential slowdown in U.S. demand outweighed fears of supply disruptions from ongoing geopolitical tensions in the Middle East and the war in Ukraine.
Brent crude futures fell 49 cents, or 0.74%, to $65.88 a barrel by 0419 GMT, while U.S. West Texas Intermediate (WTI) dropped 51 cents, or 0.82%, to $61.86.
“The (U.S.) inflation battle doesn’t quite look won, which dampens the demand outlook for oil from the world’s largest economy. Even geopolitical unrest is failing to support oil prices, as fundamentals point to an oversupply and lacklustre demand,” said Priyanka Sachdeva, senior market analyst at Phillip Nova.
Thursday’s U.S. economic data revealed consumer prices in August surged at their fastest pace in seven months, while new unemployment claims rose sharply. The figures have heightened expectations that the Federal Reserve may cut interest rates next week to stimulate growth — a move that could eventually boost oil demand.
Earlier this week, oil prices had gained nearly 2% on fears of potential supply disruptions, but those gains have been erased following the International Energy Agency’s (IEA) monthly report, which forecasted faster-than-expected growth in global oil supply this year. The report attributed the rise to planned production increases by OPEC+ members, including Saudi Arabia and Russia.
OPEC, however, left its demand growth forecasts for 2025 and 2026 unchanged, signaling confidence in the world economy’s growth trajectory. Despite this, Saudi Arabia has been aggressively raising its oil output quotas, with October exports to China expected to climb to 1.65 million barrels per day, sharply higher than September allocations.
Meanwhile, Russia — the world’s second-largest oil producer — reported one of its lowest monthly revenues from crude and oil product sales since the conflict in Ukraine began, according to the IEA.
Market analysts say the crude market remains caught between the pressures of oversupply and worries about short-term geopolitical disruptions. However, the latter is offering diminishing support to prices.
With global supply rising and U.S. stockpiles unexpectedly increasing by 3.9 million barrels last week, traders are bracing for continued volatility in oil prices in the days ahead.