Oil set for weekly decline amid strong dollar

Oil prices fell further, extending a weekly loss, due to mixed economic and consumption data from China, the ongoing impact of a stronger U.S. dollar, and growing concerns over a potential global oil glut next year.

Brent dropped to below $72 a barrel and was down by around 3% this week, while West Texas Intermediate was near $68, News.Az reports, citing foreign media.

The International Energy Agency said on Thursday it expects a surplus next year as demand growth in China slows while output swells. The glut would be even bigger if OPEC+ pressed on with plans to revive halted production, it said.

In China, while figures on Friday showed some encouraging signs for the wider economy after Beijing’s latest round of stimulus, apparent oil demand still declined in October from a year ago. In addition, local refiners processed 4.6% less oil than in the same month of 2023.

Crude has been alternating between weekly gains and losses since mid-October, buffeted by tensions in the Middle East, the prospect of oversupply, and shifts in currency markets. Still, year-to-date, Brent has retreated by more than 6%, with the global benchmark touching its lowest since 2021 in September.

“While there are some positive signs in the broader data, clearly we are not out of the woods yet,” said Warren Patterson, head of commodities strategy for ING Groep NV, referring to the Chinese economic figures. “Industrial production was weaker than expected; oil-specific numbers were also not great with both refinery activity and implied demand weaker.”

Commodities including crude have also struggled this week as a gauge of the dollar rallied to the highest in two years, powering upward in the aftermath of Donald Trump’s election victory. The US currency is set for its seventh weekly gain, making raw materials more expensive for most buyers.

News.Az