Abundant Supply Leads to Prices Fall
Oil prices fell on Friday as worrying economic data from the US and China—the world's two largest oil consumers—raised concerns about fuel demand, while investors also awaited the upcoming summit between US President Donald Trump and Russian President Vladimir Putin.
Brent futures fell 39 cents, or 0.58%, to $66.45 a barrel at 07:50 GMT. US WTI fell 42 cents, or 0.66%, to $63.54 a barrel. On a weekly basis, WTI was headed for a 0.5% decline, while Brent was expected to fall 0.2%.
Chinese government data on Friday showed factory output growth slumped to an eight-month low and retail sales growth slowed to its slowest pace since December, dampening sentiment even as refinery throughput increased in the world's second-largest crude consumer. China's refinery throughput rose 8.9% year-on-year in July, but remained below June's high, the highest since September 2023. Despite the increase in throughput, China's oil product exports also increased compared to last year, indicating weaker domestic demand.
Expectations for a larger oil market surplus are also weighing on sentiment, as is the prospect of higher US interest rates for a longer period. Bank of America analysts, in a note Thursday, said they widened their oil market surplus projections due to increased supply from OPEC+ (OPEC, Russia, and their allies). They now project an average surplus of 890,000 bpd from July 2025 to June 2026. This forecast aligns with the International Energy Agency (IEA) earlier this week, which said the oil market appears "overextended" following the OPEC+ production increase.
In the US, higher-than-expected inflation and weak labor data raised concerns that the Fed is unlikely to cut interest rates next month. Typically, lower interest rates boost economic activity and oil demand. Investors are also awaiting the Trump-Putin summit in Alaska on Friday, with a ceasefire in Ukraine high on the agenda. A ceasefire could pave the way for easing sanctions on Russian oil supplies. (ayu)
Source: Newsmaker.id
