NEW YORK: Oil prices slid about 2% on Thursday on concerns over softening US demand and broad oversupply that offset threats to output from the conflict in the Middle East and the war in Ukraine.
Brent crude futures were down $1.11, or 1.6%, to $66.38 a barrel at 11:34 a.m. EDT (1534 GMT), while US West Texas Intermediate (WTI) crude fell $1.20, or 1.9%, to $62.47.
“Oil prices are falling today in response to bearish IEA (International Energy Agency) headlines, which suggest massive oversupply on the oil market next year,” said Carsten Fritsch, an analyst at Commerzbank.
The IEA said in its monthly report that world oil supply will rise more rapidly than expected this year as the Organization of the Petroleum Exporting Countries and allies like Russia, a group known as OPEC+, increase output.
OPEC+ agreed on Sunday to raise production from October. However, in a report published after the one from the IEA, OPEC kept non-OPEC supply and demand forecasts for the year unchanged, citing steady demand.
The market was torn between a perceived supply shortage due to a rise in tensions in the Middle East and Ukraine and actual oversupply from higher OPEC+ production and swelling stocks, said Tamas Varga, an analyst at PVM Oil Associates.
Saudi Arabia’s crude oil exports to China are set to surge in October, several trade sources told Reuters on Thursday, with state-controlled energy firm Aramco shipping about 1.65 million barrels per day in October, compared with 1.43 million bpd allocated in September.
The market is also questioning how long China could continue to absorb barrels and keep Organization for Economic Co-operation and Development (OECD) inventories low, said Giovanni Staunovo, an analyst at UBS, adding that investors were also watching for further sanctions affecting Russian oil.
In Russia, the world’s second-biggest producer of crude behind the US in 2024, revenue from crude and oil products sales declined in August to one of the lowest levels seen since the start of the conflict in Ukraine, the IEA said.
US Energy Secretary Chris Wright and European Commissioner for Energy and Housing Dan Jorgensen discussed efforts to restrict Russian energy trade during talks in Brussels, with Jorgensen saying the European Union’s planned deadlines were ambitious but there is a need to speed the process.
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