Prices Slip on Economic Worries and Supply Growth
Oil prices dropped to their lowest levels in three weeks on Friday, weighed down by weak economic signals from the U.S. and China and growing concerns about global oversupply. Brent crude closed at $68.44 per barrel, down 74 cents or 1.1%, while U.S. West Texas Intermediate (WTI) slid 87 cents or 1.3%, settling at $65.16. This marks the lowest close for Brent since early July and for WTI since the end of June. Weekly losses totaled 1% for Brent and 3% for WTI.
Traders cited disappointing U.S. capital goods data and slowing fiscal revenue growth in China as key demand headwinds. Meanwhile, reports of increasing output from OPEC+ and potential supply boosts from Venezuela and Iran further added to market pressure.
Trade Talks Offer Some Relief
Despite bearish sentiment, some investors held out hope for demand recovery driven by international trade progress. European Commission President Ursula von der Leyen is scheduled to meet U.S. President Donald Trump in Scotland, where a framework deal could be reached. A successful agreement may improve global economic sentiment and oil consumption forecasts.
In the U.S., President Trump expressed optimism after his meeting with Federal Reserve Chair Jerome Powell, suggesting the Fed may be ready to cut interest rates. Lower rates typically stimulate economic activity and could indirectly support oil demand. However, macro indicators remain mixed, with U.S. capital goods orders unexpectedly declining in June and China reporting a fiscal revenue dip of 0.3% for the first half of the year.
Sanctioned Oil Supply May Rise
On the supply side, U.S. officials may allow companies like Chevron to resume limited operations in Venezuela, potentially adding 200,000 barrels per day (bpd) to global output. Meanwhile, Iran confirmed it would continue nuclear talks with Europe after renewed diplomatic engagement, raising the possibility of increased Iranian oil exports.
These developments come as OPEC and its allies prepare to meet. Although Monday’s OPEC+ committee lacks decision-making power, sources suggest the group plans to raise output to reclaim market share amid strong seasonal demand. Iran and Venezuela, both OPEC members, are central to any shift in the supply outlook.
Production and Rig Activity Update
Russian oil exports from western ports are expected to decline to 1.77 million bpd in August, down from July’s 1.93 million bpd, offering slight relief to the supply glut. In the U.S., energy firms continued to reduce drilling activity, cutting oil and gas rigs for the 12th time in 13 weeks, according to Baker Hughes. These moves signal caution among producers despite stable global demand forecasts.
