Oil experienced a slight increase on Friday after three consecutive days of declines, driven by concerns regarding surplus supply and diminishing demand in the U.S. Nevertheless, prices seemed poised for a second week of losses. Brent crude futures increased by 21 cents, representing a 0.33% rise, reaching $63.59 per barrel at 0149. U.S. West Texas Intermediate crude was priced at $59.65 per barrel, reflecting an increase of 22 cents, or 0.37%. Brent and WTI are poised to decline approximately 2% this week, marking a second consecutive week of decreases, as significant global producers ramp up production. The recent decline in prices can be attributed to an unexpected increase of 5.2 million barrels in U.S. inventories, which has reignited concerns regarding oversupply, according to IG Markets analyst Tony Sycamore.

“This has been amplified by risk-aversion flows, bolstering the dollar and the ongoing U.S. government shutdown, which continues to cloud economic activity,” he stated. The Energy Information Administration reported on Wednesday that U.S. crude stocks increased beyond expectations due to higher imports and a decrease in refining activity, whereas inventories of gasoline and distillates saw a decline. Concerns regarding the implications of the longest government shutdown in U.S. history on the broader economy have also exerted pressure on oil prices. The Trump administration has mandated reductions in flight operations at key airports, attributing this decision to a scarcity of air traffic controllers. Concurrently, private analyses indicate a deterioration in the U.S. labor market for the month of October.

Sycamore indicated that WTI prices are expected to stabilize within a range of $58 to $62 per barrel in the near term. “A potential upside catalyst is the U.S. government reopening within a week; however, persistent builds and soft demand will constrain the rally,” he added. The Organisation of the Petroleum Exporting Countries and its allies, commonly referred to as OPEC+, reached a decision on Sunday to implement a modest increase in production for December. Nevertheless, the group has opted to halt additional increases for the first quarter of the upcoming year, cautious of a potential supply surplus. Following OPEC+’s decision, Saudi Arabia, recognized as the leading exporter globally, significantly lowered its crude prices for Asian purchasers in December, reacting to a market characterized by ample supply.

The imposition of European and U.S. sanctions on Russia and Iran is causing disruptions in supply chains to the world’s largest importers, namely China and India, which in turn is offering a degree of support to global markets. On Thursday, Swiss commodity trader Gunvor announced the withdrawal of its proposal to acquire foreign assets of Russian energy company Lukoil, following remarks from the U.S. Treasury labeling it as Russia’s “puppet” and indicating opposition to the transaction from Washington.