Weak U.S. Demand Drags Oil Prices Lower

Crude prices slipped again this week as traders weighed signs of oversupply and weaker demand in the United States, the world’s largest oil consumer. Brent crude fell 14 cents, or 0.22% to $63.38 a barrel, while U.S. West Texas Intermediate (WTI) fell to $59.43, about 0.28% lower, according to Thursday’s trade data.

Although oil edged up on Friday, both benchmarks (Brent and WTI) are heading for another weekly loss, roughly 2% each after already sliding for three straight months. The steady rise in output from OPEC and its allies (OPEC+) has been accompanied by non-member producers, keeping supply levels high despite a softening in consumption.

John Kilduff, partner at Again Capital, put it simply: “The market keeps being haunted by the best-telegraphed supply glut in history.”

Can the global oil market shake off its supply worries before the year ends?

Is U.S. Demand Losing Steam?

The spotlight has shifted to American demand. Global oil use increased by 850,000 barrels per day in the year to November 4, slightly below JPMorgan’s earlier estimate of 900,000 barrels. In a client note, JPMorgan pointed out that “high-frequency indicators suggest U.S. oil consumption remains subdued,” with slower travel and weaker container traffic among the main drags.

Adding to the pressure, the U.S. Energy Information Administration reported a 5.2-million-barrel rise in crude inventories last week, taking stockpiles to 421.2 million barrels. Refinery runs have also been slower than usual during the current maintenance season, leaving more crude unused.

“There isn’t strong demand for crude in the U.S. right now,” Kilduff noted. “Low refinery runs are fundamentally weighing on prices.”

Tony Sycamore, market analyst at IG Markets, said WTI appears locked in a $58–$62 per barrel range for the time being. He added that risk-aversion flows and a firmer dollar are reinforcing the slide, while the prolonged U.S. government shutdown has dampened broader sentiment.

Can OPEC’s Strategy Steady the Market?

OPEC+ confirmed a small production increase for December but chose to pause further hikes through the first quarter of 2026, signalling caution against worsening the glut.

Even so, supply remains ample. Saudi Arabia, the world’s biggest exporter, cut its official selling prices for Asian buyers next month - a move that reflects stiff competition and abundant availability. Analysts say this discounting underlines how buyers, not sellers, currently hold the advantage.

Meanwhile, new sanctions on Russian and Iranian oil have created fresh uncertainty. Lukoil’s overseas operations, for instance, are struggling under recent U.S. and European measures. Yet traders remain unsure how deep the impact will run. “Based on the numbers, it should be bigger, but the market still needs to be convinced,” observed Jorge Montepeque of Onyx Capital Group.

These sanctions have also prompted China and India to source more crude oil directly from Russia and Iran, helping to mitigate the impact of declining Western demand.

Capital Economics expects oil to remain under pressure, forecasting $60 a barrel by the end-2025 and $50 by end-2026, a level that suggests supply will stay comfortably ahead of demand.

What Could the Next Leg Look Like?

Despite all the gloom, a few bright spots remain. If the U.S. government reopens soon, Sycamore believes it could spark a short-term rebound in WTI. Still, any sustained rally may be capped by persistent stock builds and muted consumption.

For investors, the takeaway is straightforward: oil may continue to trade within a narrow range for longer than expected. Fundamentals, rather than politics, are likely to drive the next leg. The key question now is whether OPEC+ can strike a balance before the market’s patience wears thin.

Sources

Reuters
Economic Times
Mint