Oil prices fell in early European trading on Friday, as concerns about oversupply appeared to overshadow fears of disruption to supply from ongoing geopolitical conflicts.
Brent crude (BZ=F) futures declined 0.6% to $65.95 per barrel at the time of writing, while West Texas Intermediate futures (CL=F) declined 0.7% to $61.94 a barrel.
Derren Nathan, head of equity research at Hargreaves Lansdown, said: “News of a surprise inventory build of 3.9 million barrels in the US last week is compounding mounting concerns around oversupply as OPEC+ members and other nations plan to boost production.
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“The International Energy Association expects global oil supply to rise by 2.7 million barrels per day (bpd), more than four times the projected increase in demand, with another 2.1 million bpd supply addition expected next year.”
Worries about the build up of supply comes as data released on Thursday added to concerns about the US economy and the impact this could have on oil demand. Weekly jobless claims rose to 263,000, which was much the 235,000 expected and was the most in nearly four years.
Meanwhile, the latest consumer price index (CPI) report showed inflation remained sticky last month, with the annual headline rate rising to 2.9%, compared with 2.7% in July. Month over month, prices rose 0.4% compared to July's 0.2% increase, an uptick compared to economists' expectations of a 0.3% monthly gain.
The pound was steady against the dollar (GBPUSD=X) on Friday morning, trading at $1.3562 despite data showing that UK economic growth ground to a halt in July.
Data released by the Office for National Statistics on Friday showed that the UK saw no growth in its gross domestic product (GDP) in July. This was in line with City expectations and followed 0.4% growth in June.
George Lagarias, chief economist at Forvis Mazars, said: “The UK economy continues to grow at a sluggish pace, as industrial production suffers from worsening global demand. The services sector keeps things humming, but the economy needs more than just services if it is to break out of its rut.”
“The central bank, which sees inflation pressures still somewhat intense, can do very little until next year, so it will be up to the government’s fiscal policy, or to a reversal of international trade conditions if growth is to pick up,” he said.
In other currency moves, the pound was 0.2% lower against the euro (GBPEUR=X), trading at €1.1548 at the time of writing.
