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Investing.com -- Oil prices rose Friday, but are still on course for hefty losses this week on growing worries about burgeoning global supply and cooling demand.
By 09:20 ET (14.20 GMT), the U.S. crude futures traded 1.9% higher at $74.27 a barrel, while the Brent contract climbed 1.9% to $78.91 a barrel.
Both contracts are on course for losses of around 4% this week, on track for their fourth straight week of losses, with the benchmarks having lost around a sixth of their value over the last four weeks.
U.S. inventories point to rising supplies
Oil prices have perked up Friday, a day after sinking 5% to a four month-low, mainly triggered by a bigger-than-expected build in U.S. oil inventories, coupled with record-high production levels.
This saw traders betting that oil supplies in the world’s largest fuel consumer were not as tight as initially expected.
“It has become clearer that the oil balance for the remainder of this year is not as tight as initially expected,” said analysts at ING, in a note. “Higher-than-expected supply has eroded a large amount of the expected deficit over 4Q23. And as things stand, the market is still expected to return to surplus in 1Q24.”
Additionally, easing concerns over the Israel-Hamas war weighed, as traders priced in a smaller risk premium from the conflict after it proved to have little impact on Middle Eastern supplies.
Economic weakness to weigh on demand
On the demand front, signs of steady U.S. fuel demand were largely offset by a series of weak economic prints from Japan, China, and the eurozone.
The European Commission cut its growth forecast for the eurozone in 2023 to 0.6% from the 0.8% expected in September, while Japan's economy weakened in July-September, snapping two straight quarters of expansion, data showed on Wednesday.
Data also showed that Chinese refiners processed lower amounts of oil in October than the prior month.
OPEC meeting looms large
Focus is now squarely on an upcoming OPEC meeting on Nov. 26, where traders will be looking to see if Saudi Arabia, principally, and Russia roll over their voluntary supply cuts into 2024.
The two recently vowed to maintain their cuts until the end of 2023.
“The price weakness we are seeing means that it is increasingly likely that the Saudis will roll over their additional voluntary cut of 1MMbbls/d into early next year. Doing this should help erase the expected surplus and provide some support to the market,” ING added.
(Ambar Warrick contributed to this article.)
