Oil Prices Decline Amid Uncertainty in U.S. Demand and Developments in Russian Supplies
Oil prices witnessed a decline on Friday, August 29, at the end of a week that was heading towards a closing on a high note, amidst a state of uncertainty surrounding demand levels in the United States and the ongoing developments in the Russian supply scene.
By the morning trading session, Brent crude for October delivery, which is set to expire, fell by 0.7% to reach $68.12 per barrel, while Brent crude for November delivery, the most traded contract, dropped by the same percentage to $67.52. West Texas Intermediate crude also declined by 0.7%, recording $64.15 per barrel.
Despite this daily decline, Brent crude is on track to achieve weekly gains estimated at around 0.6%, while West Texas Intermediate crude is expected to close the week up by 0.8%.
Analysts attribute part of the weekly rise to the support that prices gained earlier in the week due to Ukrainian attacks on Russian export facilities, but the market has lost some of its momentum as it anticipates the end of the summer demand season in America.
In terms of supplies, sources confirmed that the Russian Ust-Luga terminal, which is the largest outlet for exporting Urals crude via the Baltic Sea, will cut its operations by nearly half in September to reach 350,000 barrels per day. In contrast, markets are awaiting the return of more supplies as voluntary cuts from some producers come to an end.
Geopolitical developments have added another layer of complexity, as a Russian attack on the Ukrainian capital, Kyiv, on Thursday, which resulted in the death of 23 people, raised fears of stricter U.S. sanctions on Moscow.
India remains in the market's spotlight, as investors await New Delhi's stance on U.S. pressures to halt Russian oil imports, following U.S. President Donald Trump's increase of tariffs on Indian imports to 50% last Wednesday.
Regarding selling prices, sources in the refining sector indicated that Saudi Arabia, the world's largest oil exporter, may reduce selling prices for October to buyers in Asia, amidst an oversupply and weak regional demand.
