Oil prices retreated for a third consecutive day Friday, positioning crude for its first weekly decline in two weeks as mounting supply concerns overshadowed persistent geopolitical tensions.
Crude oil fell to $61.97 per barrel on September 5, down 2.38% from the previous day, extending a streak of losses that began Wednesday. The decline follows two weeks of gains and reflects growing market anxiety about potential oversupply conditions.
Sentiment turned bearish following the latest Energy Information Administration report, which revealed an unexpected 2.4-million-barrel increase in U.S. crude inventories. The build directly contradicted analyst forecasts for a 1.8-million-barrel drawdown, raising questions about domestic demand strength and adding pressure to an already fragile market sentiment.
The inventory surprise comes as markets brace for additional supply from OPEC+ producers. Eight OPEC+ countries agreed to implement a production adjustment of 547,000 barrels per day in September, marking another substantial increase in their ongoing campaign to regain market share.
This latest production hike represents part of an accelerated output expansion that began in April. The group started with a modest increase of 138,000 barrels per day in April, followed by larger hikes of 411,000 bpd in May, June and July, and 548,000 bpd in August.
The sustained production increases reflect OPEC+ confidence in market fundamentals despite current price pressures. Market analysts note that the organization’s willingness to add supply stems from relatively strong oil prices earlier in the year and concerns about maintaining market share amid shifting global energy dynamics.
However, the additional barrels are entering a market already showing signs of demand weakness. World oil demand growth is forecast to increase by 700,000 barrels per day in 2025, its lowest rate since 2009, excluding the pandemic-affected 2020 period.
The demand outlook has deteriorated further in recent months, with consumption in key emerging markets proving particularly disappointing. This slowdown coincides with broader concerns about global economic growth and energy transition policies affecting long-term petroleum consumption patterns.
Despite the bearish supply-demand dynamics, geopolitical factors continue providing some price support. Ongoing tensions in key producing regions and persistent concerns about supply disruptions have prevented a more dramatic price collapse, though these premium factors appear increasingly insufficient to offset fundamental weakness.
The current market environment presents traders with competing narratives. While geopolitical risks traditionally support oil prices, the combination of rising inventories, aggressive OPEC+ production increases, and softening demand outlook is creating downward pressure that appears increasingly difficult to ignore.
Looking ahead, market participants will closely monitor upcoming economic data for signs of demand recovery or further deterioration. The ability of geopolitical tensions to maintain price floors will likely depend on whether actual supply disruptions materialize or remain theoretical concerns.
Oil’s weekly decline marks a notable shift from recent optimism and suggests that fundamental supply-demand dynamics are beginning to reassert their influence over speculative and geopolitical factors that had previously supported higher prices.
Source: newsghana.com.gh
