Oil Prices Slip as Supply Glut Fears and Weak U.S. Demand Weigh on Market
By Naija Enquirer Staff
Oil prices fell on Thursday as investors weighed the risks of a potential global supply glut and weakening demand in the United States, the world’s largest oil consumer.
Brent crude futures slipped by 38 cents (0.6%) to $63.14 a barrel at 11:34 a.m. EDT (1634 GMT), while U.S. West Texas Intermediate (WTI) futures dropped 47 cents (0.8%) to $59.13.
Ongoing Supply Pressures from OPEC+
Global oil prices recorded their third consecutive monthly decline in October amid mounting concerns of oversupply. OPEC and its allies, collectively known as OPEC+, have ramped up production, while output from non-OPEC producers continues to grow.
“The market keeps being haunted by the best-telegraphed supply glut in history, that is a headwind to prices,” said John Kilduff, partner at Again Capital.
Weak Demand and Rising Inventories
Oil demand has also fallen short of projections. According to JPMorgan, global oil demand increased by 850,000 barrels per day in the year to November 4 — below its earlier estimate of 900,000 bpd.
“High-frequency indicators suggest that U.S. oil consumption remains subdued,” JPMorgan said, citing weak travel activity and lower container shipments as key drivers.
In the previous session, prices dipped further after the U.S. Energy Information Administration (EIA) reported a 5.2 million-barrel increase in U.S. crude inventories, bringing total stocks to 421.2 million barrels last week.
“Low refinery run rates showed there is not strong demand for crude in the U.S. right now as a result of a significant refinery turnaround season. That is fundamentally weighing on prices,” Kilduff added.
Saudi Arabia Responds to Market Oversupply
Saudi Arabia, the world’s top oil exporter, has responded to the oversupplied market by cutting its crude prices for Asian buyers in December. Analysts say the move aims to protect market share as OPEC+ boosts output.
“We think that downward pressure on oil prices will prevail, supporting our below-consensus forecast of $60 per barrel by end-2025 and $50 per barrel by end-2026,” Capital Economics stated in a market note.
Sanctions on Russia Add Mild Market Tension
While new sanctions on Russia’s largest oil companies have sparked some supply concerns, analysts believe the overall impact on prices remains limited. Lukoil’s foreign operations, according to Reuters, are facing operational challenges due to these sanctions.
“There is a little bit of an impact on prices (from the sanctions), but not a huge one,” said Jorge Montepeque of Onyx Capital Group. “Based on the numbers, it should be bigger, but the market still needs to be convinced there will be an impact.”
Outlook: Continued Pressure Through 2026
With OPEC+ production on the rise, U.S. demand softening, and refiners operating below capacity, analysts expect oil prices to remain under pressure in the coming quarters. Barring unexpected geopolitical shocks, the market could face sustained bearish sentiment through 2026.
