Oil prices slid on Thursday, settling about 2% lower as concerns over possible softening of US demand and broad oversupply offset threats to output from the conflict in the Middle East and the war in Ukraine.
Brent crude futures fell $1.12, or 1.7%, to settle at $66.37 a barrel. US West Texas Intermediate (WTI) crude fell $1.30, or 2%, to settle at $62.37.
The International Energy Agency said in its monthly report that world oil supply will rise more rapidly than expected this year due to planned output increases by OPEC+, the Organisation of the Petroleum Exporting Countries and allies like Russia.
"Oil prices are falling today (Thursday) in response to bearish IEA headlines, which suggest massive oversupply on the oil market next year," said Carsten Fritsch, an analyst at Commerzbank.
On Sunday, OPEC+ agreed to raise production from October. But in another report, however, 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.
OPEC leader Saudi Arabia's crude oil exports to China are set to surge, several trade sources told Reuters on Thursday, with state-controlled energy firm Aramco shipping about 1.65 million barrels per day in October, up sharply from 1.43 million bpd allocated in September.
The market is also questioning how long China could continue to absorb barrels and keep Organisation 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.
In India, meanwhile, the largest private port operator, Adani Group has banned entry at its ports of tankers sanctioned by Western countries, three sources said and documents show. The move could hit Russian oil supplies for two Indian refiners.
COMMENTS
Comments are moderated and generally will be posted if they are on-topic and not abusive.
For more information, please see our Comments FAQ