Crude oil prices ended the week lower, weighed down by concerns over a potential supply surplus and persistently sluggish demand, even as the OPEC+ alliance delayed planned production increases and extended deep output cuts through late 2026. Brent crude futures slipped 1.1% on Friday to $71.32 per barrel, while U.S. West Texas Intermediate (WTI) crude declined 1.3% to $67.43 per barrel, leaving both benchmarks poised for weekly losses.
Analysts say the market's muted reaction to OPEC+'s recent move reflects lingering skepticism. "They're just waiting for better pricing and once they get that, they're going to start jumping in again," said Bob Yawger, director of energy futures at Mizuho in New York. While OPEC+ is responsible for about half of the world's oil output and has repeatedly adjusted its production strategy in response to demand signals, the group's influence appears constrained by rising supply elsewhere and tepid consumption in key markets.
The extended timeline for unwinding cuts-initially planned to start next year but now postponed until the end of 2026-has done little to lift sentiment. Analysts at HSBC Global Research noted, "While OPEC+'s decision to hold off strengthens fundamentals in the near term, it could be seen as an implicit admission that demand is sluggish." Despite these measures, recent forecasts suggest that demand growth, especially in China, is weaker than previously anticipated.
Macquarie Group's projection of a "heavy surplus" next year, exceeding 1 million barrels per day, underscores the challenge ahead. Bank of America also warned that a lingering supply glut and lackluster demand could push Brent prices down to an average of $65 a barrel in 2025. Notably, China's diminished appetite for crude has come into sharper focus, with data indicating that the world's second-largest consumer is not absorbing barrels at a pace vigorous enough to support higher prices.
Adding to the market's woes, the U.S. dollar strengthened on Friday after initially dipping on a mixed U.S. jobs report. The currency's rebound further pressured oil, which is priced in dollars. Jim Ritterbusch of consultancy Ritterbusch and Associates commented, "In the absence of a positive currency factor, other bearish headlines will likely receive an accentuated response in eventually pushing the key crude benchmarks to as low as $61 and $65 by month's end."
Within this challenging environment, some market watchers see prices locked in a narrow trading range. "The general narrative is that the market is stuck in its rather narrow range. While immediate developments might push it out of this range on the upside briefly, the medium-term view remains rather pessimistic," said PVM analyst Tamas Varga. Despite occasional geopolitical flare-ups, including ongoing tensions surrounding the Ukraine-Russia conflict, such risks have failed to sustain a long-term rally in crude.
OPEC's own figures show production rose slightly in November, while U.S. crude inventories remain below seasonal averages. According to Wednesday's EIA data, U.S. crude production touched a record 13.513 million barrels per day, although active U.S. oil rigs have declined from recent peaks. Meanwhile, non-OPEC supply growth appears poised to offset any OPEC+ restraint, fueling oversupply worries.
Gasoline futures, too, fell amid weak fundamentals, with January RBOB gasoline dropping 1.32%. Demand-side jitters persist as global manufacturing and industrial output remain lackluster. Although some positive signals emerged from U.S. employment and consumer sentiment data, they were not sufficient to buoy crude against the current tide of bearish indicators.
