Crude oil product saw the largest weekly drop in 11 months, and the soft US employment report has exacerbated market concerns about the lackluster demand from the world's top consumer of crude oil.
WTI fell 2.1% on Friday, settling at $67.67 per barrel; marking the largest weekly decline since October 2023.
While the US employment data released on Friday fueled speculation about the Fed's possible aggressive rate cuts, it further demonstrated the narrative of weak petroleum consumption, which has been weighing on crude oil prices for weeks.
"The market is still anxiously assessing the global economic situation and the actions the Fed will take," said Rebecca Babin, Senior Energy Trader at CIBC Private Wealth.
Recent measures to limit supply have failed to stop the decline in crude oil. While OPEC+ canceled its plan to increase production by 0.18 million barrels per day in October and November this week, a long-term plan to restore a 2.2 million barrels per day capacity within a year still exists, with the daily completion date pushed back two months to December 2025.
Brent futures have been declining since early July, sparking concerns about demand amid economic weakness. The steadily increasing US crude oil production in recent years has brought supply-side pressure to the global market. As a result, even with OPEC+ delaying production increases and US crude oil inventories falling by nearly 7 million barrels in a single week, oil prices have not been significantly supported.
Next week, OPEC's monthly market outlook, the Energy Information Administration, and reports from the International Energy Agency will be closely monitored.
WTI October crude oil futures fell 2.1%, with a settlement price of $67.67 per barrel. Brent November crude oil futures fell 2.2%, with a settlement price of $71.06 per barrel.