Oil Prices Slightly Rebound but Difficult to Change Downward Trend
International oil prices rose slightly last Friday, yet still recorded a nearly 3% weekly decline, mainly constrained by rising supply surplus expectations and concerns about economic growth. Brent crude futures settled at $61.29 per barrel, up 0.38%; US WTI crude futures at $57.54 per barrel, up 0.14%. Although prices have stabilized in the short term, analysts generally believe that the global crude oil market's supply and demand structure is under pressure.
The latest report from the International Energy Agency (IEA) pointed out that global oil supply will continue to grow over the next two years, while demand growth will slow. The market may fall into a deeper supply surplus situation. This prediction caused oil prices to sharply fall earlier this week, limiting the room for subsequent rebounds.
Geopolitical Easing Weakens Safe-Haven Buying
Uncertainties in geopolitics temporarily supported oil prices, but conditions significantly eased this week. Israel and Hamas reached a temporary ceasefire agreement, cooling tensions in the Middle East, reducing investors' safe-haven needs. Meanwhile, US President Trump and Russian President Putin confirmed a meeting in Hungary in the next two weeks to discuss the Ukraine conflict. Market interpretations suggest any diplomatic progress between the two could help alleviate tensions in the global energy market.
However, Ukraine is still seeking more military support. Ukrainian President Zelensky visited the US last Friday, urging the White House to approve a new round of military aid, including Tomahawk cruise missiles. At the same time, the US is pressuring India to reduce its purchase of Russian oil. These dynamics have, to some extent, reinforced the complex expectations of the crude oil supply pattern.
Rising Inventories and Expanding Supply Increase Pressure
The continued expansion of supply is the biggest challenge facing oil prices. Data released by the US Energy Information Administration (EIA) showed that US crude inventories surged by 3.5 million barrels last week to 423.8 million barrels, far exceeding the market's expected increase of 288,000 barrels. Meanwhile, US daily crude output rose to 13.636 million barrels, setting a new record.
Analysts pointed out that increased inventories and record-high production indicate that US shale oil companies are still intensifying extraction efforts. If global demand recovery does not meet expectations, such supply growth may further suppress oil prices. The IEA had previously warned that by 2026, the global oil market might encounter a daily supply surplus exceeding 3 million barrels.
Trade Tensions Exacerbate Demand Concerns
The escalation of trade frictions has also become a major factor dragging on the energy market. The Trump administration recently imposed higher tariffs on goods from certain countries, raising market concerns about a slowdown in global economic growth. Weak economic activity directly impacts the outlook for oil consumption, especially energy demand in the manufacturing and transportation sectors.
In its latest report, investment firm Energy Aspects stated that if trade tensions persist, global oil demand growth may be further revised down from the IEA's predicted annual increase of 1.3 million barrels.
Oil Prices May Maintain a Weak Turbulent Pattern
Overall, short-term oil price movements still depend on supply-demand data and geopolitical developments. Although easing Middle Eastern tensions have temporarily stabilized market sentiments, the persistent pressure from supply surpluses and rising inventories will continue to affect investor confidence. Analysts expect that if the Federal Reserve further cuts interest rates to stimulate economic activity, oil prices might gain medium-term support.
In the coming weeks, the market will closely monitor whether OPEC+ adjusts its production cut policy and the progress of the Trump-Putin meeting. If diplomatic negotiations yield positive results, oil prices may maintain range-bound volatility in the short term; otherwise, if supply continues to grow and demand remains weak, the crude oil market may face a new round of corrective cycles.
