Oil Prices Head For Sharpest Weekly Drop In Over Three Months
Analysts expect potentially higher OPEC+ supply, slowing global refinery runs due to seasonal maintenance, and weaker demand ahead to accelerate stock builds in the US and other markets.
Oil prices inched up on Friday after four consecutive sessions of declines, though they remain on track for their steepest weekly fall since late June. Brent crude futures rose 18 cents, or 0.3 per cent, to $64.29 a barrel by 05:30 AM. US West Texas Intermediate (WTI) crude gained 19 cents, or 0.3 per cent, to $60.67 a barrel.
If prices fail to recover further in the session, Brent could end at its lowest closing level since the week ending May 30, while WTI is poised to settle at levels last seen on May 2. For the week, Brent has slumped 8.3 per cent, while WTI has dropped 7.6 per cent.
OPEC+ Supply Decision Weighs On Market
Markets remain under pressure amid expectations that OPEC+ could approve a sharper production hike. The group may raise oil output by up to 5,00,000 barrels per day in November, triple the increase planned for October, as Saudi Arabia looks to regain market share, according to sources cited by Reuters.
Tony Sycamore, analyst at IG, said, “If OPEC+ do go ahead and announce a 5,00,000 bpd increase this weekend, it’s likely a big enough increase to send crude oil lower again, initially to support at $58.00, before a test of this year’s lows $55.00 area.”
Seasonal Demand Dip Adds To Pressure
Analysts expect potentially higher OPEC+ supply, slowing global refinery runs due to seasonal maintenance, and weaker demand ahead to accelerate stock builds in the US and other markets.
Data released on Wednesday by the US Energy Information Administration showed crude, gasoline and distillate inventories rising last week, reflecting softer refining activity and demand.
Broader Economic And Geopolitical Risks
Concerns over a possible US government shutdown, which could severely impact economic activity, are also weighing on sentiment. Additionally, the resumption of Kurdish oil exports from Iraq has added to supply-side worries.
Meanwhile, finance ministers from the Group of Seven (G7) nations reaffirmed their commitment to increasing pressure on Russia, pledging fresh measures aimed at those continuing to boost purchases of Russian oil.
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