Oil prices fell 1% on Friday and were headed for a weekly loss as analysts projected a supply surplus next year despite an OPEC+ decision to delay output hikes and extend deep production cuts to the end of 2026.
Brent crude futures were down 85 cents, or 1%, to $71.24 per barrel at 11:04 a.m. EST. U.S. West Texas Intermediate crude futures CLc1 were down 92 cents, or 1%, to $67.38 per barrel.
For the week, Brent was on track to fall by more than 2%, while WTI was on course for a nearly 1% drop.
On Thursday, the Organization of the Petroleum Exporting Countries and allies in OPEC+ pushed back the start of oil output rises by three months until April and extended the full unwinding of cuts by a year until the end of 2026.
Weak global oil demand and the prospect of OPEC+ ramping up production as soon as prices rise have weighed on prices, said Bob Yawger, director of energy futures at Mizuho in New York.
"They're just waiting for better pricing and once they get that, they're going to start jumping in again," Yawger said.
OPEC+, responsible for about half of the world's oil output, was planning to start unwinding cuts from October 2024, but a slowdown in global demand - especially from top crude importer China - and rising output elsewhere have forced it to postpone the plan several times.
"While OPEC+'s decision to hold off strengthens fundamentals in the near term, it could be seen as an implicit admission that demand is sluggish," said analysts at HSBC Global Research.
Bank of America forecasts increasing oil surpluses to drive Brent to average $65 a barrel in 2025, while expecting oil demand growth to rebound to 1 million barrels per day (bpd) next year, the bank said in a note on Friday.
HSBC, meanwhile, now expects a smaller oil market surplus of 0.2 million bpd, from 0.5 million bpd previously, it said in a note.
Brent has largely stayed in a tight range of $70-75 per barrel in the past month, as investors weighed weak demand signals in China and heightened geopolitical risk in the Middle East.
"The general narrative is that the market is stuck in its rather narrow range. While immediate developments might push it out of this range on the upside briefly, the medium-term view remains rather pessimistic," PVM analyst Tamas Varga said.
Also pressuring prices was a mixed jobs report out of the United States, which showed an increase in hiring but also a slight rise in those who are unemployed.