Oil prices slipped amid concerns over oversupply and a stronger dollar, despite a significant drop in U.S. fuel stocks. Brent crude futures fell by 30 cents, or 0.41%, to $72.26 per barrel, while U.S. West Texas Intermediate (WTI) crude futures declined by 25 cents, or 0.36%, to $68.45 per barrel as of 0105 GMT.

For the week, Brent is poised for a 2.2% drop, and WTI is set for a 2.7% decline.

U.S. crude inventories rose by 2.1 million barrels last week, according to the Energy Information Administration (EIA), far exceeding the expected 750,000-barrel increase. However, gasoline stocks fell by 4.4 million barrels, reaching their lowest levels since November 2022, defying predictions of a 600,000-barrel build. Distillate inventories, including diesel and heating oil, also saw an unexpected decline of 1.4 million barrels.

While signs of stronger fuel demand provided some support, ANZ analyst Daniel Hynes noted that the market remains pressured by a bleak demand outlook.

The International Energy Agency (IEA) forecasts global oil supply to exceed demand in 2025, citing rising production from non-OPEC+ producers like the U.S., despite ongoing production cuts. The IEA adjusted its 2024 demand growth forecast slightly upward to 920,000 barrels per day (bpd) but left its 2025 outlook nearly unchanged at 990,000 bpd.

OPEC recently revised its global demand growth forecasts downward for 2024 and 2025, marking its fourth consecutive downgrade, citing economic weaknesses in China, India, and other regions.

Adding further pressure, the U.S. dollar surged to a one-year high, driven by higher yields and the impact of Donald Trump's presidential election victory. The stronger dollar reduces the purchasing power of buyers using other currencies, weighing on oil prices. (ET)