Oil prices are on track for a third consecutive monthly decline on Friday, as a strong dollar and weak Chinese data cap gains, while increased supply from major global producers offsets the impact of Western sanctions on Russian exports.
Brent crude futures fell 36 cents, or 0.55%, to $64.64 a barrel by 04:10 GMT, while WTI crude was down 43 cents, or 0.71%, at $60.14 a barrel.
Brent and WTI are on track for a nearly 3% decline in October.
The US dollar gained after Fed Chair Jerome Powell said on Wednesday that a December interest rate cut was not guaranteed, and the stronger US dollar dampened investor appetite across the commodity complex.
PMI data showed a seventh month of contraction in factory activity in China. The survey showed that China’s factory activity contracted in October, also contributing to the decline in prices.
Both Brent and WTI fell by about 3% in October, with increased supply expected to outpace increased demand this year, and major non-OPEC producers are increasing production to gain market share.
Higher supply will also cushion the impact of Western sanctions disrupting Russia’s oil exports to its largest buyers, China and India.
The eight OPEC+ members have raised their production targets by a total of more than 2.7 million barrels per day—about 2.5% of global supply—in a series of monthly increases. Sources say OPEC+ is moving toward a modest production increase ahead of its meeting on Sunday.
Meanwhile, data show Saudi Arabia’s crude exports reached a six-month high of 6.407 million barrels per day in August and are expected to continue rising.
A U.S. Energy Information Administration (EIA) report also indicated record production of 13.6 million barrels per day last week.
Trump announced on Thursday that China had agreed to begin the process of purchasing energy from the U.S. and that a very large-scale transaction involving oil and gas from Alaska could take place.
However, analysts remained skeptical about whether the U.S.-China trade agreement would increase China’s demand for U.S. energy.
By the way, Alaska produces a modest 3% of total U.S. crude oil production, and China’s Alaska LNG purchases are likely to be market-driven.