Oil prices exhibited minimal change on Friday but are poised for their fourth consecutive week of losses, having plummeted approximately 5% to a four-month low on Thursday amidst escalating concerns about global demand.
Brent futures inched up by 7 cents, or 0.1%, reaching $77.49 a barrel at 0702 GMT. Meanwhile, U.S. West Texas Intermediate crude (WTI) stood at $72.96, reflecting a marginal increase of 6 cents, or 0.1%. Over the past four weeks, both benchmarks have experienced a decline of roughly a sixth of their value.
Goldman Sachs analysts noted in a statement, “Oil prices are down slightly this year despite demand exceeding our optimistic expectations. Non-core OPEC supply has been much stronger than expected, partly offset by OPEC cuts.”
Monthly spreads for both Brent and WTI have shifted to contango, indicating a market trend where prompt prices are lower than those in future months, signaling a robust supply.
The decline in oil prices this week was primarily instigated by a substantial surge in U.S. crude inventories and production remaining at record levels. Analysts contend that this has raised apprehensions about weak demand in the world’s largest oil consumer amid elevated output.
JPMorgan commodities research reported on Friday that its global oil demand tracker revealed an average demand of 101.6 million barrels a day (bpd) in the first half of November, falling 200,000 bpd below its monthly projection.
Analysts anticipate that the recent price drop may prompt Saudi Arabia to extend its additional voluntary oil output cut of 1 million bpd into 2024. ING analysts remarked, “It has become clearer that the oil balance for the remainder of this year is not as tight as initially expected. As things stand, the market is still expected to return to surplus in 1Q24.”
The potential extension of additional Saudi supply cuts into early 2024 is anticipated to alleviate the projected surplus and offer some support to the market, according to ING.
