Oil markets opened the week trading in a narrow band, with gains from geopolitical tensions offset by concerns over higher production and weak demand prospects.
Prices dipped slightly on Monday, reflecting a cautious tone as traders balanced supply disruptions from the Russia-Ukraine conflict against signals of rising output from major producers, reported Reuters.
Muted Trading Amid Global Pressures
Brent crude slipped by 12 cents, or 0.18 per cent, to $67.36 a barrel in early Asian trading, while US West Texas Intermediate (WTI) crude fell 13 cents, or 0.2 per cent, to $63.88. Analysts expect volumes to remain subdued through the day due to the US bank holiday.
The cautious sentiment comes after Ukrainian President Volodymyr Zelenskiy pledged further retaliation against Russia following drone attacks on power facilities. Intensified strikes by both countries in recent weeks have targeted energy infrastructure, curtailing some Russian exports. According to data cited by ANZ analysts, weekly shipments from Russian ports declined to 2.72 million barrels per day, the lowest level in four weeks.
Concerns Over Oversupply
While Russian flows remain under scrutiny, forecasts suggest that prices are unlikely to see major gains this year. A Reuters survey published last week pointed to growing risks of oversupply, with top producers continuing to ramp up output. In the US, crude production reached a record high of 13.58 million barrels per day in June, up 133,000 barrels per day from May, according to the Energy Information Administration.
Investors are also keeping a close eye on OPEC and its allies, with a meeting scheduled for 7 September expected to provide fresh signals on the group’s production strategy. Any hint of additional supply could further weigh on the market.
Demand Outlook Under Strain
Global demand concerns remain another headwind. China’s manufacturing sector contracted for a fifth consecutive month in August, an official survey revealed on Sunday, underlining sluggish domestic demand and uncertainty around trade relations with the US. At the same time, fears that American tariffs could dampen consumption continue to linger.
Markets are also awaiting the latest US jobs report later this week, which is set to provide important clues about the health of the world’s largest economy. Traders believe the data could influence the pace of expected interest rate cuts, which in turn may sway risk appetite for commodities such as oil.
Balancing Risks Ahead
For now, oil remains caught between supply-side disruptions and the prospect of rising output. While geopolitical tensions lend support to prices, strong US production, soft Chinese demand, and uncertainty around tariffs are preventing any significant rally. With OPEC+ discussions on the horizon and key US economic data due, the coming days are likely to set the tone for crude markets heading into September.
