Oil prices fell early Friday as concerns about oversupply and falling demand due to a stronger dollar outweighed a sharp drop in US fuel inventories.
Brent crude futures fell 30 cents, or 0.41%, to 72.26 USD/barrel. U.S. West Texas Intermediate crude futures fell 25 cents, or 0.36%, to 68.45 USD/barrel.
Overall for the week, Brent oil prices are expected to fall by about 2.2%, while WTI is expected to fall by 2.7%.
Data from the US Energy Information Administration (EIA) showed that US crude oil inventories rose by 2.1 million barrels last week, much higher than analysts' expectations for an increase of 750,000 barrels.
Gasoline stocks hit their lowest since November 2022, falling 4.4 million barrels last week, compared with analysts' expectations in a Reuters poll for a 600,000-barrel increase. Distillate stocks, which include diesel and heating oil, also unexpectedly fell by 1.4 million barrels.
Oil prices came under pressure after the market was reminded of the bleak outlook for demand, with the International Energy Agency (IEA) forecasting that global oil supply will exceed demand by 2025 even if OPEC+ cuts are maintained. This is largely due to rising output from the US and other non-OPEC+ producers outpacing slowing demand, according to Daniel Hynes of ANZ.
The IEA raised its 2024 demand growth forecast by 60,000 barrels to 920,000 barrels per day, and kept its 2025 oil demand growth forecast unchanged at 990,000 barrels per day.
OPEC this week cut its forecast for global oil demand growth for this year and 2025, citing weakness in China, India and other regions, marking the fourth straight time the producer group has revised down its outlook for 2024.
Adding to pressure on oil prices, the dollar surged on Thursday to a one-year high and was on track for a fifth straight day of gains, boosted by rising yields and Donald Trump’s presidential election victory in the United States.
A stronger US dollar makes dollar-priced oil more expensive for holders of other currencies, which could dampen demand.
