Onome Amuge
Oil prices slipped on Friday as market traders braced for weaker demand in the United States, the world’s largest crude consumer, and a fresh wave of supply expected from OPEC and its allies this autumn.
Brent crude futures for October delivery, which expired on Friday, settled at $68.12 a barrel, down 50 cents, or 0.73 per cent. The more active November contract closed down 53 cents, or 0.78 per cent, at $67.45. West Texas Intermediate (WTI) crude fell 59 cents, or 0.91 per cent, to $64.01.
The moves reflected a shift in sentiment as the summer driving season in the U.S. draws to a close, with consumption expected to ease after the Labor Day holiday on Monday. The slowdown coincides with supply-side developments from the OPEC+ alliance, which has accelerated its output increases in recent months to recover lost market share.
“Overall, the bottom line is we’re going to see a jump in supply feeding into a lacklustre demand market,” said Andrew Lipow, president of consultancy Lipow Oil Associates.
Market participants are already looking ahead to next week’s OPEC+ meeting, where the producer group is expected to outline its strategy for the remainder of the year. While the bloc has so far managed a delicate balancing act between price stability and gradual production hikes, its determination to expand supply has weighed on sentiment.
“The market is beginning to wonder what effect the tariffs might have on the economic outlook next year,” Lipow added, referring to fresh U.S. import duties announced by President Donald Trump’s administration.
The Trump administration’s decision to increase tariffs on a wide range of imports, including a doubling of duties on goods from India to as high as 50 per cent, has fuelled concerns about global growth. Lower trade flows could depress fuel consumption at a time when inventories remain volatile.
Not all analysts share the downbeat view. Phil Flynn, senior analyst with Price Futures Group, argued that the pessimism around market demand is overstated.
“Supply from OPEC is supposed to increase, but we’re not seeing it in the U.S. I think things are going to stay tight,” Flynn said.
Recent data from the U.S. Energy Information Administration (EIA) showed crude inventories for the week ending August 22 fell by more than expected, signalling firm late-summer demand, particularly from freight and industrial users. “The drawdown highlights resilience in underlying consumption,” wrote Ole Hvalbye, analyst at SEB Bank, in a client note.
Prices earlier in the week had gained on reports of Ukrainian drone attacks against Russian oil export infrastructure, raising fears of potential supply disruptions. But reports of exploratory ceasefire talks between Ukraine’s European allies and Moscow helped cool those concerns, easing upward pressure on crude.
At the same time, attention is turning to India, which has continued to increase purchases of discounted Russian crude despite U.S. pressure. Traders expect shipments to India to rise in September, even as Washington presses New Delhi to reduce reliance on Moscow.
“The prevalent view is that Russian sanctions are not forthcoming, and India will ignore U.S. sanction threats and continue buying Russian crude oil at heavily discounted prices,” said Tamas Varga, analyst at PVM Oil Associates.
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