Oil headed for a third straight weekly drop on growing demand concerns and the unwinding of its war-risk premium, with Saudi Arabia blaming speculators for the decline.
Global benchmark Brent crude was steady near $80 a barrel on Friday and is down around 6% this week, while West Texas Intermediate was close to $76. Prices edged higher Thursday after comments by Saudi Energy Minister Prince Abdulaziz bin Salman that were similar to his criticism of speculators in May, weeks before the kingdom cut output.
Brent has plummeted more than 13% over the past three weeks on bearish demand signals from China, the US and Europe, while flows from the Middle East remained unaffected by the Israel-Hamas war. Hedge fund manager Pierre Andurand also pointed to larger-than-expected supplies — citing high production in the US and Iran — as a catalyst for the recent retreat.
It’s a sharp reversal from late September, when Brent flirted with $100 a barrel and the Organization of Petroleum Exporting Countries projected an unprecedented decline in inventories amid record fuel demand and the Saudi cuts. Attention has now shifted to a refining downturn in China and stubbornly high interest rates in the US.
Read More: Oil’s Rally Toward $100 Fizzles as Economic Outlook Darkens
Diesel — a key fuel powering the economy — is becoming the latest drag on oil, with US futures slumping about 8% this week. That echoes softness in Europe, where declines in industrial and economic activity in Germany, France and Spain have driven a sharper retreat of fuel consumption.
The rapidly souring sentiment has caused WTI’s prompt spread to flip to a bearish contango structure, where near-term prices are below longer-dates ones, for the first time since July. The turnaround comes as American production rises to a record and stockpiles at the nation’s top storage hub come off critically low levels.
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