Oil News: Crude Futures Slide as Weak Demand, IEA Oversupply Analysis Weighs

Oil Prices Dip as OPEC+ Supply and Weak U.S. Demand Weigh on Market

Crude oil prices pulled back nearly 1% on Thursday, with bearish sentiment driven by oversupply concerns and disappointing U.S. demand figures, despite ongoing geopolitical tensions. The market gave back Wednesday’s conflict-driven gains, as traders shifted focus back to fundamentals.

Brent crude slipped 63 cents, or 0.9%, to $66.86 a barrel by midday in London, while WTI crude dropped 68 cents, or 1.1%, to $62.99. The previous session’s rally—fueled by Israel’s strike on Hamas leaders in Qatar and NATO’s interception of Russian drones over Poland—proved short-lived as oversupply headlines dominated trading desks.

OPEC+ Output Increase Counters Middle East Risk Premium

The International Energy Agency warned Thursday that global oil supply is expected to rise faster than demand, citing increased production from OPEC+ and non-OPEC sources. OPEC+, which agreed Sunday to ramp up output starting in October, appears to be driving the imbalance. The IEA’s call confirms what many traders already suspect—supply is running ahead of consumption growth.

Saudi Arabia, the bloc’s largest producer, is aggressively targeting China with cut-price barrels. October exports are projected at 1.65 million bpd, up sharply from September’s 1.43 million bpd. This increase in physical flows underscores the group’s intent to hold market share, even at the risk of adding pressure to already soft prices.

U.S. Inventory Build and Fed Policy Expectations Add Downside Pressure

Latest EIA data revealed a surprise build of 3.9 million barrels in U.S. crude inventories for the week ending September 5. Traders had anticipated a draw of around 1 million barrels. The bearish stock data, coupled with signs of weakening fuel demand, reinforces the view that the U.S. market is oversupplied.

Meanwhile, Federal Reserve policy remains a wildcard. Expectations for a rate cut next week are already priced in, but traders are closely watching the U.S. inflation print due Thursday. A stronger-than-expected CPI could disrupt the bond rally and send crude lower on a stronger dollar.

Technical Resistance Adds to Bearish Oil Prices Forecast

Technically, WTI crude remains range-bound below key moving averages. Price action is clustered around the 200-day moving average at $63.32, and upside momentum is unlikely to build without a firm break above the 50-day at $64.40. This setup suggests a market still lacking conviction.

Outlook: Bearish Bias as Fundamentals Overpower Geopolitics

While geopolitical risks in the Middle East and Eastern Europe continue to provide short-term support, the broader crude oil outlook remains bearish. Rising OPEC+ output, swelling U.S. inventories, and lackluster demand are keeping a lid on rallies. Until supply tightens or demand surprises to the upside, traders should expect continued pressure on prices.

More Information in our Economic Calendar.