Oil prices slipped on Friday, setting up for a third consecutive monthly decline, as a stronger U.S. dollar and weak Chinese economic data dampened sentiment. Meanwhile, higher output from top global producers continued to outweigh the impact of Western sanctions on Russian crude exports.
By 07:44 GMT, Brent crude futures were down 12 cents, or 0.18%, at $64.88 a barrel, while U.S. West Texas Intermediate (WTI) crude dropped 21 cents, or 0.35%, to $60.36 a barrel.
“A stronger USD weighed on investor appetite across the commodities complex,” ANZ analysts said in a client note.
The greenback strengthened after Federal Reserve Chair Jerome Powell said on Wednesday that an interest rate cut in December was “not guaranteed,” lifting the dollar and pressuring dollar-denominated commodities.
Oil prices also weakened after official data showed that China’s factory activity contracted for the seventh consecutive month in October, underscoring the fragile state of demand in the world’s top crude importer.
Both Brent and WTI are on track for losses of roughly 3% in October, with global oil supply expected to outpace demand growth this year. The Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, have been gradually increasing production to protect market share.
Additional supply is expected to help absorb the effects of Western sanctions that have disrupted Russian exports to key buyers such as China and India.
Sources familiar with discussions said OPEC+ members are leaning toward a modest output increase in December, ahead of the group’s meeting on Sunday. The alliance has already raised production targets by over 2.7 million barrels per day (bpd) — around 2.5% of global supply — through a series of monthly adjustments.
In Saudi Arabia, crude exports reached a six-month high of 6.407 million bpd in August, according to data from the Joint Organizations Data Initiative, and are expected to rise further. Meanwhile, the U.S. Energy Information Administration reported record domestic production of 13.6 million bpd last week.
U.S. President Donald Trump said on Thursday that China had agreed to begin purchasing U.S. energy, adding that “a very large-scale transaction may take place involving the purchase of oil and gas from Alaska.”
However, analysts expressed doubts about whether a U.S.-China trade deal would lead to a meaningful boost in Chinese demand for American energy. “Alaska produces only 3% of total U.S. crude oil output (not significant), and we think Chinese purchases of Alaskan LNG likely would be market driven,” said Barclays analyst Michael McLean in a note.
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