Oil Down Again Amid Demand Worries That Puzzle Some Analysts

Meanwhile, a 25-year crude deal between China and Afghanistan has collapsed: File Image/Pixabay

To the bewilderment of some analysts, oil on Friday incurred yet another round of losses, with traders reportedly worried about weaker demand in the U.S. as an accompaniment to perceptions of weak demand elsewhere in the world.

Brent settled down 50 cents at $68.12 per barrel, and West Texas Intermediate settled down 59 cents at $64.01.

Demand concerns seemed to be inspired by the end of the U.S. summer driving season, but Phil Flynn, senior market analyst at Price Futures Group Inc., said, "The pessimism about demand, I'm just not seeing it.

"Supply from OPEC is supposed to increase, but we're not seeing it in the U.S….I think things are going to stay tight."

Ole Hvalbye, analyst at SEB bank, pointed out in a note that recent U.S. inventory draws suggested late-summer demand was still firm, particularly in industrial and freight-related sectors.

Still, the Energy Information Administration disclosed on Friday that U.S. crude production hit record highs in June, by 133,000 barrels per day (bpd) to 13.58 million bpd; but this was offset by gasoline demand, which rose 205,000 bpd in June to 9.23 million bpd, its highest since July 2024.

In other oil news on Friday, a 25-year deal signed in 2023 by China and Taliban-controlled Afghanistan to extract crude in the central Asian country has collapsed, with each side accusing the other of breach of contract.

Afghanistan accused China of failing to meet its commitments of investment, pay royalties on time, and complete key infrastructure projects; China accused the Taliban of forcibly taking over the oil fields and driving personnel out of them at gunpoint.

Also on Friday, the California Energy Commission was reportedly to vote on a five-year delay to the so-called refinery profit cap, passed in the state in 2023 with the goal to limit spikes at the pump for Californian residents; the move is seen as a rare win for the oil and gas industry in that state.