Brent loses some momentum on oversupply concerns
The front-month ICE Brent contract has lost by $0.48/bbl on the day from Friday, to trade at $61.28/bbl at 09.00 GMT.
IMAGE: Getty Images
Upward pressure:
Escalating geopolitical tensions have provided some support to Brent crude’s price over the weekend.
Last week, US President Donald Trump-led government announced fresh sanctions on six oil tankers transporting Venezuelan crude, following the seizure of a tanker off Venezuela's coast.
“President Trump announced new sanctions on three of Venezuelan President Maduro’s nephews as well as six oil tankers,” ANZ Bank’s senior commodity strategist Daniel Hynes said.
The news has raised some supply concerns, according to market analysts. “Until this latest escalation, Venezuela had been raising its oil exports,” Hynes said.
The oil market is also facing heightened tensions between Russia and Ukraine, “despite the US still pushing for a peace deal,” he further added.
Downward pressure:
Weighing on Brent’s price, the total number of rigs drilling for crude oil in the US rose by one last week to 414 units, according to Baker Hughes.
The US oil rig count is seen as an indicator of future oil production. It reflects how much oil drilling activity is happening or expected to happen in the shale sector.
Additionally, recent projections by energy agencies have revived concerns over a potential supply glut – putting downward pressure on Brent’s price.
The International Energy Agency (IEA) sees global oil supply to grow by 3.3 million b/d to average 106.2 million b/d in 2025 and rise by about 2.4 million b/d to average 108.6 million b/d in 2026.
“Crude oil also fell as weakness in US equity markets added to bearish sentiment about oversupply,” Hynes noted.
Meanwhile, US-based Energy Information Administration (EIA) expects global liquid fuels production to grow by 3 million b/d to reach 106.1 million b/d in 2025 and by another 1.3 million b/d to touch 107.4 million b/d next year.
By Aparupa Mazumder
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