International crude oil prices fell by more than one per cent in the previous session to report a weekly loss after analysts projected a supply surplus next year on weak demand despite the Organisation of Petroleum Exporting Countries and its allies (OPEC+)‘s recent decision to delay the oil output hikes till April 2025 and extend the deep production cuts to the end of 2026.

Brent crude futures settled at $71.12 a barrel, shedding 97 cents, or 1.4 per cent. US West Texas Intermediate (WTI) crude futures settled at $67.20 a barrel, falling $1.10, or 1.6 per cent. For the week, Brent prices lost more than 2.5 per cent, while WTI saw a drop of 1.2 per cent. Back home, crude oil futures settled 1.4 per cent lower at ₹4,724 per barrel on the multi-commodity exchange (MCX).

Brent down over 2% in 5 days: What’s weighing on crude oil prices?

-A rising number of oil and gas rigs deployed in the US this week, pointing to rising production from the world’s biggest crude producer, also pushed prices lower. A mixed US jobs report showed a strong rebound in hiring and a slight rise in the unemployment rate, extending crude oil’s losses.

-WTI and Brent have met resistance at their short-term moving averages, prompting algorithm-driven traders to enter the market and extend losses. Oil slid to the lowest in three weeks on Friday due to concerns about excess supplies and a wave of technical selling. US West WTI futures declined 1.9 per cent to trade below $67 a barrel and touched their lowest intraday price since November 18.

-On Thursday, the OPEC+ cartel pushed back the start of oil output rises by three months until April and extended the full unwinding of cuts by a year until the end of 2026. Analysts said weak global oil demand and the prospect of OPEC+ ramping up production as soon as prices rise have weighed on trading.

-The oil cartel also said the cuts would occur until September 2026, nine months later than planned. OPEC+ has discussed plans for a supply hike since June. OPEC+ opted to start with a modest output increase in April and unwind the cuts over 18 months. Saudi Arabian Energy Minister Prince Abdulaziz bin Salman told CNBC on Friday that the deferral was aimed at offsetting a seasonal demand lull early next year.

-Analysts added that OPEC+ is just waiting for better pricing, and once they get that, they will start jumping in again. OPEC+, responsible for about half of the world’s oil output, planned to start unwinding cuts from October 2024. Still, a slowdown in global demand—especially from top crude importer China—and rising output elsewhere have forced it to postpone the plan.

-Analysts at HSBC Global Research said while OPEC+’s decision to hold off strengthens fundamentals in the near term, it could be seen as an implicit admission that demand is sluggish. HSBC, meanwhile, now expects a smaller oil market surplus of 0.2 million bpd, from 0.5 million bpd previously

-Bank of America forecast that increasing oil surpluses will drive Brent’s price to an average of $65 a barrel in 2025, while oil demand growth will rebound to one million barrels per day (bpd) next year, the bank said in a note on Friday.

-Brent has largely stayed in a tight range of $70-$75 per barrel in the past month, as investors weighed weak demand signals in China and heightened geopolitical risk in the Middle East. Crude has been range-bound since mid-October, with bullishness from geopolitical developments in the Middle East and Ukraine countered by expectations of a glut in 2025.

-According to analysts, the general narrative is that the market is stuck in its narrow range. While immediate developments might briefly push it out of this range on the upside, the medium-term view remains rather pessimistic. Energy services firm Baker Hughes said the US rig count grew for the first time in eight weeks, pressuring prices.

-According to Baker Hughes, US oil rigs rose five to 482 this week, their highest level since mid-October, while gas rigs rose by two to 102, the highest since early November. Despite this week’s rig increase, Baker Hughes said the total count was still down 37, or six per cent below this time last year.

Where are prices headed?

Analysts said crude oil prices have dropped 18 per cent since July as global markets face China’s slowdown, US supply, and potential policy shifts. Oil is also facing resistance after the Israel-Hamas ceasefire deal. However, the weak dollar index and upbeat Chinese economic data support crude oil prices at lower levels.

“We expect crude oil prices to remain volatile. Crude oil has support at $67.50-66.80 and resistance at $68.85-69.40. In INR crude oil has support at ₹5,750-5,670 while resistance at ₹5,890-5,960,” said Rahul Kalantri, VP Commodities, Mehta Equities Ltd.