MUSCAT: Oil prices experienced a significant drop on Friday, with Brent crude and West Texas Intermediate (WTI) each declining by nearly $2 per barrel. The sharp fall came as investors reacted to the possibility of increased oil production from OPEC+ nations, stirring concerns about oversupply in an already fragile market. Brent settled around $83 per barrel, while WTI hovered near $79, reflecting the bearish sentiment that gripped traders by the close of the week.
The downturn was further exacerbated by weaker-than-expected employment data out of the United States. The U.S. Labor Department’s report revealed that job growth slowed considerably in July, with fewer nonfarm payrolls added than forecasted. This underperformance raised doubts about the resilience of the U.S. economy and could signal reduced demand for fuel and energy in the coming months. As a result, oil traders scaled back expectations for strong consumption in the world’s largest oil consumer.
Compounding the negative sentiment, there have been growing rumors that some OPEC+ member countries, particularly Saudi Arabia and Russia, may reconsider production cuts implemented earlier in the year. While no official announcement has been made, any indication of a shift in output policy would likely weigh heavily on prices. Market analysts are closely watching the upcoming OPEC+ meetings for clarity on whether the alliance will maintain its current restrictions or choose to ease supply constraints to capture more market share.
Investor caution was also heightened by signs of rising inventories in key storage hubs. Preliminary data from U.S. energy agencies suggested that crude oil stockpiles rose modestly, contradicting earlier forecasts of a drawdown. This mismatch between expectation and reality only intensified worries about a potential imbalance between supply and demand. With several macroeconomic uncertainties looming, including the direction of U.S. interest rates and China’s sluggish post-pandemic recovery, oil prices may remain volatile in the near term.
