Oil prices have continued their downward trend, hitting a fresh five-month low amid growing concerns about a potential oversupply in the market. West Texas Intermediate crude settled near $US58 a barrel, marking its lowest level since May. Trading was volatile throughout the day, with prices fluctuating after a decline of approximately 7 per cent over the previous five trading sessions.
Despite a rebound in equity markets following signals from the Federal Reserve about a possible interest rate cut later this month, oil prices remain under pressure. A key factor contributing to this decline is the decision by the OPEC+ alliance earlier this year to reinstate shuttered production at a faster-than-expected rate. This move has heightened worries about a significant supply glut in the global market.
According to UBS analyst Giovanni Staunovo, oil prices are still being significantly affected by trade tensions and shifts in risk sentiment. He noted that the positive performance of equity markets is providing some limited support to oil, but the overarching concerns about supply are dominating market activity.
The persistent weakness in oil prices underscores the complex interplay of factors influencing the energy market, with supply-side dynamics currently outweighing positive signals from broader financial markets.
