Global Oil Prices Tumble on Weak Manufacturing Demand and Rising Supply

Global crude oil prices are experiencing a downturn, with West Texas Intermediate (WTI) hovering near $59.60, marking a 2.5% drop over two weeks. This decline is primarily attributed to weakening global demand, evidenced by Saudi Arabia's decision to lower its December crude prices for Asia to an 11-month low. Manufacturing sectors across the US, China, and Europe are showing a broad slowdown. The US ISM Manufacturing PMI fell to 48.7, indicating contraction for the eighth consecutive month, while China's NBS Manufacturing PMI dropped to a six-month low of 49.0. The Eurozone Composite PMI also slipped. Impact: This demand weakness puts significant downward pressure on oil prices. Rating: 7/10 Adding to the bearish sentiment, the market anticipates a supply glut. Both OPEC+ and the United States are boosting production. OPEC+ is set to add more output, while US crude production has reached a record high, contributing to a significant increase in inventories. The International Energy Agency (IEA) forecasts a substantial surplus in 2026. Impact: Increased supply is a major bearish factor for oil prices. Rating: 8/10 Geopolitical events, specifically the Russia-Ukraine war, are also playing a role. Ukrainian attacks on Russian refineries have disrupted Russian oil exports and refining capacity, which has provided some support to prices by limiting supply. However, the overall market balance leans towards surplus. Impact: Geopolitical disruptions can cause short-term price spikes but the underlying supply/demand fundamentals point to lower prices. Rating: 5/10 The near-term outlook for WTI crude is between $57–$62 per barrel, with potential upside to $65 if Russian supply disruptions escalate. However, the overarching bearish base case remains unless geopolitical tensions intensify. Definitions: * WTI: West Texas Intermediate, a benchmark grade of crude oil used in US oil pricing. * YTD: Year-to-Date, refers to the period from the beginning of the current calendar year up to the present day. * PMI: Purchasing Managers' Index, an economic indicator derived from monthly surveys of purchasing managers in the manufacturing and service sectors. A PMI below 50 indicates contraction, while a reading above 50 indicates expansion. * OPEC+: Organization of the Petroleum Exporting Countries plus its allies, including Russia, which coordinate oil production policies. * IEA: International Energy Agency, an intergovernmental organization that provides analysis on the global energy markets. * bpd: Barrels per day, a standard unit for measuring oil production or consumption.