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Oil prices dipped slightly on Friday as oversupply concerns and demand uncertainties—driven in part by a strengthening dollar—outweighed a sharp drop in U.S. fuel stockpiles. Brent crude futures fell 30 cents, or 0.41%, to USD 72.26 a barrel, while U.S. West Texas Intermediate (WTI) dropped 25 cents, or 0.36%, to USD 68.45 as of 0105 GMT.
Image Source: BBC News
For the week, Brent is on track for a 2.2% decline, and WTI is set for a 2.7% decrease. The Energy Information Administration (EIA) reported a 2.1 million-barrel increase in U.S. crude inventories last week, well above analyst forecasts of a 750,000-barrel rise.
In contrast, gasoline stocks fell by 4.4 million barrels, hitting their lowest level since November 2022, defying expectations of a 600,000-barrel increase. Distillate stockpiles, including diesel and heating oil, also unexpectedly dropped by 1.4 million barrels.
ANZ analyst Daniel Hynes noted, “Signs of stronger demand supported oil prices.” However, Hynes pointed out that the market’s focus on oversupply and weak demand outlook exerted downward pressure.
The International Energy Agency (IEA) projected a global oversupply by 2025, even if OPEC+—comprising the Organization of the Petroleum Exporting Countries and allies like Russia—continues output cuts. Rising production from the U.S. and other non-OPEC producers is expected to exceed sluggish demand.
Adding further pressure, the dollar surged to a one-year high on Thursday, marking a fifth consecutive daily gain spurred by higher yields and Donald Trump’s election win. A stronger dollar typically makes oil more expensive for international buyers, potentially lowering demand for dollar-priced crude.
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