Crude oil prices rose slightly on Friday, buoyed by a surprise drop in U.S. inventories and simmering geopolitical tensions in the Middle East. Despite the gains, both Brent and U.S. West Texas Intermediate (WTI) are heading for their largest weekly decline in over a month as fears of weakening global demand overshadow supply concerns.
By early Friday, Brent crude futures were up 16 cents to $74.61 per barrel, while WTI climbed 17 cents to $70.84 per barrel. This modest uptick followed data from the Energy Information Administration (EIA) showing a drop in U.S. crude, gasoline, and distillate inventories, which helped support prices after four consecutive days of losses.
However, the broader picture suggests oil prices remain under pressure. U.S. crude production hit a record 13.5 million barrels per day last week, raising concerns about rising supply, especially as Libyan output has resumed and OPEC+ plans to unwind production cuts by 2025. Additionally, both Brent and WTI are on track for a roughly 6% weekly decline, the steepest since early September.
Market sentiment has also been dampened by OPEC and the International Energy Agency (IEA) cutting their forecasts for global oil demand in 2024 and 2025. Meanwhile, uncertainty over China’s economic stimulus measures has raised questions about their potential impact on oil demand. Citi analysts noted that while speculative bets on Brent rose due to fears of a possible Israeli strike on Iranian oil infrastructure, those risks seem to have eased following reports that the U.S. urged Israel not to target oil facilities.
As the market digests these factors, oil is balancing between supply concerns and demand uncertainties, making it vulnerable to further volatility in the coming weeks.
