Glut Concerns Weaken Oil Prices

By Adedapo Adesanya

Oil prices declined on Thursday as investors considered a potential supply glut, as well as weakened demand in the United States, the world’s largest oil consumer, with Brent crude futures depreciating by 14 cents or 0.22 per cent to $63.38 a barrel and the US West Texas Intermediate (WTI) crude futures down by 17 cents or 0.29 per cent to $59.43 per barrel.

The market is gripped by fears of oversupply as the Organisation of the Petroleum Exporting Countries and allies (OPEC+) increase output while production from non-OPEC producers is also still growing.

Also, the market is faced with demand weakness. According to JPMorgan, in the year to November 4, global oil demand rose by 850,000 barrels per day, below the 900,000 barrels per day projected previously by the bank.

Oil prices fell in the previous session after the US Energy Information Administration (EIA) said crude stocks in the world’s largest oil producer rose by 5.2 million barrels to 421.2 million barrels last week.

Market analysts note that prices are facing pressure as low refinery run rates show there is not strong demand for crude in the US at the moment as a result of a significant refinery turnaround season.

Saudi Arabia, the world’s top oil exporter, sharply reduced the prices of its crude for Asian buyers in December, as OPEC+ producers boost output.

The OPEC+ alliance agreed to raise production by 137,000 barrels per day for December and then pause further supply increases in the first quarter of 2026. Since April this year, OPEC+ has lifted output targets by around 2.9 million barrels per day (approximately 2.7 per cent of global supply), and the pace has recently been slowed amid those additions which have added to concerns about oversupply.

The latest sanctions on Russia’s biggest oil companies, Rosneft and Lukoil, two weeks ago are sparking concerns about supply disruptions, despite rising output from OPEC and its allies. For instance, Lukoil’s operations at its foreign businesses are struggling in the face of the sanctions.