Oil edged higher on Friday after three days of declines in the US due to concerns about oversupply and slowing demand, but prices are poised for a second weekly decline.
Brent crude futures rose 28 cents, or 0.44%, to $63.66 a barrel at 04:21 GMT. WTI was trading 29 cents, or 0.49%, higher at $59.72 a barrel.
Brent and WTI are expected to fall around 2% this week as major global producers increase production. This decline is set to continue for the second consecutive week. The decline stems from a surprise US inventory increase of 5.2 million barrels, which has reignited fears of oversupply.
This was compounded by risk-off measures that strengthened the dollar and the US government shutdown, which continues to impact economic activity.
The Energy Information Administration (EIA) said on Wednesday that US crude oil inventories rose more than expected due to increased imports and reduced refinery activity, while gasoline and distillate inventories fell.
Oil prices were also pressured by concerns about the impact of the longest government shutdown in US history on the broader economy.
The Trump administration ordered flights at major airports to be reduced due to an air traffic controller shortage, and private reports indicate that the US labor market weakened in October.
As is well known, OPEC+ decided on Sunday to slightly increase production in December. However, the group paused further increases in the first quarter of next year due to concerns about oversupply.
Following the decision, Saudi Arabia, the world’s largest exporter, sharply lowered crude oil prices for Asian buyers in December in response to a well-supplied market.
Sanctions imposed by Europe and the US on Russia and Iran are also providing some support to global markets by disrupting supply to China and India, the world’s largest importers.
On Thursday, Gunvor announced that it had withdrawn its offer to acquire the foreign assets of Russian energy company Lukoil. The US has labeled Lukoil a “puppet” of Russia, and Washington likely opposed the deal.
Gunvor’s cancellation of the Lukoil asset purchase demonstrates that the US is continuing its maximum pressure campaign against Russia and that sanctions against Rosneft and Lukoil will be strictly enforced.
According to data from the General Administration of Customs, crude oil imports from China, the world’s largest oil importer, reached 48.36 million tons in October, a 2.3% increase compared to September and an 8.2% increase compared to the previous year, driven by high utilization rates at the country’s refineries.