Oil prices posted a big loss over the last week, despite ongoing disruptions to supply in Libya, a major drawdown in U.S. crude inventories, and OPEC+’s decision to delay a planned output increase by two months.
Brent ended down 10% for the week, settling at $71.06 a barrel on Friday – its lowest level since Dec. 2021. West Texas Intermediate (WTI) shed 8% for the week and ended at $67.67 a barrel.
Late last week, Libya declared a force majeure on several crude cargoes as production has been curtailed amid a political standoff over the central bank and oil revenue.
Meanwhile, U.S. crude inventories fell by nearly 7 million barrels in a week and hit a one-year low.
While all of these factors should be supportive for prices, they haven’t been. Oil futures are down again today, even as the U.S. Gulf Coast is bracing for a potential hurricane that could impact some oil and gas infrastructure this week.
The weather system is anticipated to make landfall along the Louisiana coast as a Category 1 storm, with several liquefied natural gas plants in its path. Shell has already paused some operations offshore as the storm approaches.
Even so, natural gas prices are down today at roughly $2.19 per million British thermal units, off more than 4%.
Demand concerns appear to be keeping a cap on prices, with the market closely watching weakness in the Chinese economy and a shift to lower carbon fuels.
In the U.S. oil consumption slowed in June to its lowest seasonal level since the coronavirus pandemic of 2020, the U.S. Energy Information Administration said in its monthly supply and demand report in August.
Demand concerns have also hit the fuels market hard, with U.S. gasoline futures slumping to near a three-year low last week. In Asia, refining margins are at their lowest seasonal level since 2020 as supplies have jumped.
The market is bracing for lower prices. Bank of America Global Research on Friday lowered its 2025 Brent forecast by $5 to $75, pointing to weaker demand, particularly from China, as well as growing inventories.
Trading houses Gunvor and Trafigura, meanwhile, expect oil prices to range between $60 and $70 due to sluggish Chinese demand and oversupply, executives said at the APPEC conference in Singapore.
