Oil Prices Decline Amid Supply Concerns

Oil prices fell slightly in Asian trade on Friday after data revealed a larger-than-expected build in U.S. inventories, indicating weak demand, leading to concerns of a weekly loss.

Key Highlights

• Prices were affected by OPEC’s lowered demand outlook and lackluster stimulus measures from China.
• A strong dollar further pressured oil prices.

Brent oil futures for January decreased by 0.4%, settling at $72.30 a barrel, while West Texas Intermediate crude futures fell to $68.26 a barrel by 20:12 ET (01:12 GMT).

Weekly Decline

Both Brent and WTI futures experienced declines of over 2% this week. Initial losses were triggered by unimpressive stimulus measures from China, particularly a lack of targeted fiscal actions to boost spending and support the property market.

OPEC cut its 2024 demand forecast for the fourth consecutive month due to worries surrounding China. Sentiment weakened further with the renewed trade war possibilities, especially after Donald Trump's 2024 presidential election victory, as he promised to impose high tariffs on China.

U.S. Inventory Changes

Recent government data indicated that U.S. oil inventories rose by approximately 2.1 million barrels for the week ending November 8, significantly higher than the forecasted 0.4 million barrels. This marked a second week of excess inventory growth, amplifying concerns about a supply surplus while production levels hover near 13 million barrels per day.

Despite higher inventory, significant declines in distillate and gasoline stocks pointed to ongoing strong demand in the U.S., although this pattern may change with winter approaching.

IEA Outlook

The International Energy Agency (IEA) raised its 2024 demand growth forecast to 920,000 barrels per day, anticipating stronger gasoil demand in several regions. However, it left the 2025 outlook unchanged, warning of a potential supply surplus exceeding demand, even if OPEC maintains its current supply cuts.