Oil Prices Slip, Set for Third Straight Monthly Loss as Strong Dollar and Rising Supply Weigh
Oil prices fell slightly on Friday, heading for a third consecutive monthly decline, as a stronger U.S. dollar and weak China economic data limited gains. Rising supply from major producers also outweighed the effects of Western sanctions on Russian oil exports.
Strong Dollar and Weak China Data Pressure Oil
Brent crude futures slipped 12 cents, or 0.18%, to $64.88 a barrel by 07:44 GMT. U.S. West Texas Intermediate (WTI) crude dropped 21 cents, or 0.35%, to $60.36 a barrel.
According to ANZ analysts, a firmer dollar weighed on investor sentiment across the commodities market. The U.S. dollar index gained strength after Federal Reserve Chair Jerome Powell said that an interest rate cut in December was not guaranteed.
Oil prices also came under pressure after official data showed that China’s factory activity contracted for a seventh consecutive month in October, signaling weaker demand from the world’s second-largest oil consumer.
Rising Supply Caps Gains
Both Brent and WTI are on track to fall around 3% in October, as supply continues to rise faster than demand. The Organization of the Petroleum Exporting Countries (OPEC) and its allies have been increasing production to maintain market share, offsetting any losses caused by sanctions on Russia’s energy exports.
Sources familiar with the matter said OPEC+ is leaning toward a modest output boost in December, ahead of its next policy meeting. The group’s eight largest members have already increased their combined output by over 2.7 million barrels per day, roughly 2.5% of global supply, through a series of monthly adjustments.
Global Producers Expand Output
Crude exports from Saudi Arabia, the world’s top exporter, rose to a six-month high of 6.4 million barrels per day in August, according to data from the Joint Organizations Data Initiative (JODI). Volumes are expected to climb further in the coming months.
In the U.S., the Energy Information Administration (EIA) reported record-high oil production of 13.6 million barrels per day last week.
Meanwhile, President Donald Trump said on Thursday that China had agreed to begin purchasing U.S. energy products, including a potential large-scale deal for Alaskan oil and gas. However, analysts questioned whether the U.S.-China trade agreement would meaningfully boost Chinese demand.
Barclays analyst Michael McLean noted that Alaska accounts for only 3% of total U.S. oil output, suggesting that any related liquefied natural gas (LNG) deals would likely be market-driven rather than politically motivated.
