Oil prices edge higher but remain set for weekly losses amid oversupply worries

Oil prices rose slightly on Friday after three consecutive days of declines, but remained on track for a second straight week of losses as growing inventories and soft demand weighed on the market.

Brent crude gained 21 cents to trade at $63.59 a barrel, while US benchmark West Texas Intermediate climbed 22 cents to $59.65 by early Asian trading hours. Despite the modest rebound, both benchmarks are expected to end the week down around 2 percent as global producers continue to pump more oil into an already well-supplied market.

Oversupply and weak demand dampen sentiment

The latest slide in prices was fuelled by an unexpected rise in US crude inventories, which jumped by 5.2 million barrels last week, according to the Energy Information Administration. The build-up revived fears of a supply glut at a time when refining activity has slowed and imports have increased.

Tony Sycamore, an analyst at IG Markets, said the larger-than-expected stockpile gain has “amplified concerns about oversupply,” adding that a stronger dollar and rising investor caution have added pressure to the oil market.

Traders are also watching the impact of the ongoing US government shutdown, which has begun to affect economic activity. The suspension of several government operations and reduced air traffic due to staffing shortages have raised worries over weakening demand for fuel.

OPEC+ cautious despite output increase

The Organisation of the Petroleum Exporting Countries and its allies (OPEC+) announced earlier this week that they would slightly raise production in December but hold off on further increases in the first quarter of next year to prevent a market glut.

Following that decision, Saudi Arabia lowered its selling prices for Asian buyers in December, a move analysts see as a response to softening regional demand.

Meanwhile, sanctions on Russia and Iran continue to disrupt some exports to major buyers like China and India, offering limited support to global prices.

Sycamore expects WTI to remain between $58 and $62 a barrel in the near term, noting that any rebound will likely depend on the US government reopening soon and demand picking up again.