Oil Prices Decline Amid Expectations of Increased Supplies Impacting Market Sentiment

Oil Prices Decline for Third Consecutive Day Amid Supply Concerns

Oil prices decreased for the third day in a row on Friday, indicating a likely lower end to the week. Investors are reacting to the anticipation of increased supplies from Libya and the broader OPEC+ coalition of oil exporters.

As of 0036 GMT, Brent crude futures fell by 57 cents, or 0.8%, settling at $71.03 per barrel. Meanwhile, U.S. West Texas Intermediate crude futures declined by 58 cents, or 0.9%, to $67.09 a barrel. On a weekly basis, Brent is projected to drop approximately 4.6%, while WTI is expected to slide around 6.6%.

Market analysts from FGE Energy noted that the key developments influencing the markets this week revolve around Libya and OPEC+. A recent agreement between rival factions claiming control over the Central Bank of Libya has resolved their disputes, which previously led to a significant decrease in the country’s oil production and exports. Crude exports plummeted to 400,000 barrels per day (bpd) this month from over 1 million bpd last month. Analysts believe the agreement could potentially restore over 500,000 bpd of Libyan supply to the market.

In a separate development, the Organization of Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+, are currently implementing a production cut of 5.86 million bpd. However, they plan to reverse some of these cuts, specifically about 180,000 bpd, in December.

A recent media report suggested that this reversal may stem from Saudi Arabia’s shift away from aiming for a $100 oil price target in favor of increasing market share. This shift reportedly caused a 3% drop in oil prices during the previous session. Despite this, Saudi Arabia has denied any intention of targeting specific oil prices, with sources asserting that the decision to raise output in December does not signify a significant shift in policy.

Speculation surrounding market share dynamics has intensified, especially given the already low investor sentiment. FGE Energy emphasized that oil markets remain cautious about global oil balances for 2025 and the actions OPEC+ may take, with the prevailing bearish mood highlighted by historically low net positioning on ICE Brent contracts.

In summary, the combination of potential supply increases from Libya and OPEC+’s planned production adjustments is contributing to the downward trend in oil prices, prompting cautious sentiment in the market.