Lagos — Crude Oil prices experienced a slight rebound on Friday but failed to avoid weekly losses. Brent crude rose to around $67.00 per barrel, while West Texas Intermediate (WTI) reached $63.30. These levels represent more than 2.90% and 3.00% weekly declines, respectively.
The price behavior reflects a combination of factors, including growing concerns about a global oversupply and ongoing trade tensions between the world’s two largest economies: the United States and China.
The market closely monitors signals that could point to a greater oil flow. The OPEC+ alliance, which brings together the leading oil-producing countries, could accelerate the pace of production increases if demand is considered stable or growing.
However, such a move could put downward pressure on prices if not accompanied by a proportional increase in consumption. Adding to this is the potential resolution of the conflict in Ukraine, which could pave the way for larger volumes of Russian crude oil to return to the international market.
On the trade front, mixed signals between the United States and China continue to generate uncertainty. Although China recently decided to exempt some U.S. products from tariffs, this gesture has not been enough to dispel fears of a new deterioration in bilateral relations.
The outcome of these negotiations is crucial, as understanding between both countries could stimulate global trade and energy demand.
Domestically, the United States continues to show signs of expanding production capacity. The number of active crude oil rigs slightly increased, suggesting expectations of higher supply from the North American country. This factor further strengthens the outlook for abundant crude supply in the medium term, posing a challenge to maintaining high prices.
Investors are also cautiously watching the evolution of demand, especially in developed economies facing signs of a slowdown. A weaker pace of economic growth can translate into softer energy demand, reinforcing the imbalance between supply and consumption. This perception and producers’ tendency to maximize revenue through higher output volumes set the stage for volatility.
Additionally, speculative movements in financial markets also influence crude oil prices. In times of uncertainty, investment funds and other major players may reduce their exposure to crude, accelerating price declines or amplifying rallies. The perception of global risk, the behavior of the dollar, and inflation expectations are variables that interact with oil prices in a complex and constant way.
In conclusion, the crude oil market remains caught between opposing forces: a supply that tends to increase and a demand subjected to economic and geopolitical uncertainties. Although oil rebounded slightly at the weekly close, current fundamentals point to a bearish environment. The upcoming moves by OPEC+, the evolution of the war in Ukraine, and the course of U.S.-China negotiations will be key in shaping the price trend in the coming weeks.”
Analysis by Antonio Di Giacomo, Financial Markets Analyst for LATAM at XS
