SINGAPORE: Crude prices slipped slightly on Friday, extending the losses seen a day earlier as fears of slowing US demand and signs of a growing global surplus overshadowed concerns about supply disruptions from the Middle East and the ongoing war in Ukraine.
By 0114 GMT, Brent crude futures were trading down 30 cents, or 0.45 percent, at $66.07 a barrel, while US West Texas Intermediate (WTI) crude eased 31 cents, or 0.5 percent, to $62.06. Both benchmarks had already fallen sharply in the previous session, with Brent shedding 1.7 percent and WTI dropping 2 percent.
OPEC+ supply plans add pressure
Thursday’s decline came on the heels of a monthly report from the International Energy Agency (IEA), which projected global oil supply to grow faster than earlier expected this year. The rise is largely tied to planned production increases from the Organisation of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, a grouping known as OPEC+.
OPEC itself, in a separate report, stuck to its relatively high global oil demand growth forecasts for 2025 and 2026, noting that the world economy continues to show steady growth. Over the weekend, OPEC+ agreed to further raise oil output quotas starting in October, a move led by Saudi Arabia as it pushes to reclaim market share.
At the same time, Saudi crude shipments to China are set to climb notably. According to several trade sources cited by Reuters, state-run giant Aramco is preparing to export about 1.65 million barrels per day to China in October, up from 1.43 million bpd in September.
“The market is questioning how long China can continue to absorb barrels and keep OECD inventories low,” said Giovanni Staunovo, an analyst at UBS. He added that traders are also keeping an eye on the possibility of new sanctions on Russian oil.
Weak US demand, rising inventories weigh on sentiment
Russia, the world’s second-largest oil producer after the US, has also seen its revenues from crude and petroleum product sales fall to one of their lowest levels since the start of the war in Ukraine, the IEA reported.
In addition, Reuters said Russia plans to lower its ESPO Blend oil loadings from the Far East Kozmino port to 4 million metric tonnes in September, down from 4.2 million tonnes in August.
In the US, rising inventories are fuelling worries about slowing demand. The Energy Information Administration said on Wednesday that crude stocks rose by 3.9 million barrels last week to 424.6 million barrels.
While US consumer prices surged in August at their fastest pace in seven months, a jump in first-time unemployment claims has kept market expectations high that the Federal Reserve could cut interest rates next week.
Such a move might lift economic activity and, in turn, oil demand, but for now the market remains focused on signs of weakening consumption and growing supplies.