Crude Oil Faces Steep Weekly Decline

Oil prices saw a modest recovery on Friday, but the uptick wasn’t enough to prevent crude from heading toward a significant weekly loss of roughly 7% or more. The dominant factor weighing on the market is the anticipation of a potential increase in supply from major oil-producing nations.

This weekend, the influential alliance of oil producers is set to discuss its output strategy for November. Reports suggest the group, led by a push from Saudi Arabia to reclaim market share, could agree to a larger supply boost than in previous months. This possible surge in production, potentially two or three times higher than the previous hike, has dampened market sentiment, pushing prices to a recent low.

Adding to the downward pressure is the expected shift in market fundamentals. Analysts predict that global oil supplies will outpace demand starting in the fourth quarter and extending into the next year, leading to a surplus. This expectation is reinforced by a seasonal slowdown in consumption and maintenance schedules for global refineries now that the summer driving season is over.

Separately, a fire at a large refinery on the U.S. West Coast was reported, but analysts believe the incident is unlikely to have a broad impact on overall oil prices. Because the refinery is geographically isolated from the main U.S. domestic oil flows, any localized effect is expected to be minimal. Ultimately, the market remains focused on the outcome of the production talks, which will determine supply levels heading into the end of the year.