Oil prices fell on Friday but are headed for a 2% gain over the week due to tight supplies in the US and expectations for strong fuel demand in China during the Golden Week holiday.
Brent December futures fell 14 cents to $92.96 a barrel at 06:20 GMT, while Brent November futures fell 38 cents to $95.00 a barrel before expiring on Friday.
West Texas Intermediate (WTI) crude oil fell 9 cents to $91.62 a barrel.
After prices rose almost 30% this quarter to a one-year high, analysts are focused on whether leading producer Saudi Arabia will increase supply.
Brent struggled to hold on to the gains made earlier in the trading session. With the market in overbought territory, there is likely reluctance among participants to move higher.
By the way, there is also concern that if prices remain much higher, OPEC+ and especially Saudi Arabia may begin to ease cuts earlier than planned.
A ministerial panel of the Organization of the Petroleum Exporting Countries and its allies, called OPEC+, will meet on October 4, where participants will discuss their opinions on the current situation. The meeting will be an important update for the market regarding the review of voluntary supply cuts.
The improvement in macroeconomic data from China, the world’s largest oil importer, limited price declines along with strong fuel demand in the country, which went on a one-week Golden Week holiday on Friday. The increase in international travel during the Golden Week holiday increases China’s oil demand.
Domestic travel is also expected to boost demand, with the average number of daily flights booked being five times higher in 2019 than during the Golden Week, before COVID.
China’s factory activity was likely to remain steady in September, surveys show, adding to a number of indicators that suggest the world’s second-largest economy is stabilizing and that could further boost demand. Official data will be announced on Saturday.
Data released Thursday showed that the U.S. economy maintained a fairly solid pace of growth in the second quarter, with activity appearing to accelerate this quarter, pointing to possible healthy fuel demand.
The tight supply environment in the US has provided further price support, with storage at Cushing, the delivery point for US crude oil futures, currently at its lowest level since July 2022.
US oil production will also naturally slow down due to declining rig numbers. Low supply and record global demand of 103 million barrels/day could push the market into a deficit of more than 2 million barrels/day in the final quarter.