Oil prices declined, ending a three-day streak of gains as a deteriorating market outlook overshadowed worries about possible geopolitical supply disruptions. West Texas Intermediate (WTI) crude decreased by 2 per cent, settling below $US63 a barrel. The decline followed a report from the International Energy Agency (IEA) projecting an even larger record oil surplus in the coming year. The IEA cited the ongoing increase in production by OPEC+ nations and growing supply from competing sources as factors contributing to the expected surplus.
Adding to the negative sentiment, recent economic data from the United States revealed a surge in jobless claims. This development has heightened concerns about the weakening state of the labour market in the world’s largest economy, further impacting oil prices. The rise in unemployment claims contributes to broader worries about potential decreases in demand for oil.
The price retreat occurred after three days of gains spurred by geopolitical tensions in the Middle East and Europe. US President Donald Trump’s remarks questioning Israel’s attack in Qatar and Russia’s incursion into Polish airspace briefly spiked futures as investors covered short positions. However, the impact of these geopolitical factors was ultimately outweighed by the larger concerns about oversupply and economic weakness.
The oil market remains sensitive to both geopolitical events and economic indicators. The balance between potential supply disruptions and the outlook for global demand will likely continue to influence price movements in the near term, with the focus remaining on production levels and economic data releases.
