Global oil prices posted a weekly loss by Friday’s close, as fears of growing oil supplies from Saudi Arabia overshadowed China’s efforts to stimulate its economy.
The U.S. benchmark, West Texas Intermediate, fell 4.4% for the week (despite a small rebound on Friday), while the global benchmark, Brent, pulled back by 3.6%.
Prices declined throughout the week, even as conflict in the Middle East escalated. Israel launched an airstrike in Beirut, targeting Hezbollah leader Hassan Nasrallah and killing him.
Oil sold off on Thursday after the Financial Times reported that Saudi Arabia plans to boost output later this year, even if it results in prolonged lower prices.
Such a move could disrupt the OPEC+ alliance, whose second-largest producer after Saudi Arabia is Russia. Russia has been selling its crude illegally and is said to be a significant 'cheater' on the production caps the group is trying to maintain.
Iraq and Kazakhstan have also been overproducing, exceeding their assigned production limits.
OPEC+ recently postponed planned output increases from October to December due to weak demand, but analysts speculate that the group might delay the hikes further because oil prices remain low.
The OPEC+ group had been scheduled to start returning 2.2 million barrels per day of voluntary cuts to the market beginning October 1. However, weak prices pushed this out to the start of December.
The OPEC+ nations are operating under two separate production frameworks: the official policy calls for a combined production of 39.725 million barrels per day (bpd) next year. Additionally, eight members are voluntarily curbing their output by another 1.7 million bpd through 2025.
The oil sell-off on Thursday erased earlier gains from the week, which had come after China unveiled a new round of economic stimulus measures. Months of weak demand from China have weighed on the oil market since the first quarter of this year.
On Friday, however, oil prices saw gains—1.3% for WTI and 0.62% for Brent—due to Hurricane Helene in the southeastern U.S., which caused 25% of the capacity in the U.S. Gulf of Mexico to be suspended. This followed a significant reduction in production due to another storm the previous week.
The number of oil rigs in the U.S. fell by four for the week ending Friday, according to energy services company Baker Hughes. This decline ended two weeks of small gains.
The oil rig count dropped to 484 from 488 on a weekly basis (compared to 500 at the end of 2023), while gas rigs added three, bringing the total to 99. Miscellaneous rigs remained unchanged at four. A year earlier, the U.S. had 502 oil rigs, 116 gas rigs, and five miscellaneous rigs in operation.
