Crude Retreat: Oil Prices Decline Amid Weak Global Demand and Inventory Surprise

Oil prices slipped in early Asian trading on Wednesday, weighed down by concerns over slowing global consumption and a firmer U.S. dollar. West Texas Intermediate (WTI) futures declined about 0.7% to $60.13 per barrel, while Brent crude, the global benchmark, eased roughly 0.6% to $64.04.

The market remains torn between sluggish demand expectations and continuing supply constraints. Demand uncertainty is particularly evident in parts of Asia, where reduced industrial activity and lower energy use are dampening growth forecasts. A stronger U.S. dollar has further pressured prices by making dollar-denominated crude more expensive for international buyers.

To stabilize the market, the OPEC+ alliance has announced that it will suspend previously planned output increases during the first quarter of 2026, following a minor expansion scheduled for December. Analysts suggest that the move reflects growing concern over a potential surplus of supply. However, traders appear unconvinced that the production pause will provide significant near-term support unless consumption strengthens.

Bearish sentiment was reinforced by data from the American Petroleum Institute (API) showing a surprise rise in U.S. crude inventories—often a sign that refineries are cutting intake or storage levels are outpacing demand. Non-OPEC production growth and weaker Asian refinery runs are also contributing to mild oversupply signals in the global market.

Early Asian trading volumes indicate that investors are hesitant to push prices higher without a clear catalyst, such as a strong rebound in demand or a major supply disruption. For now, the market appears to be waiting for fresh direction.

Traders are closely watching the upcoming U.S. Energy Information Administration (EIA) inventory report and new macroeconomic data from Asia for hints about future demand trends. A larger-than-expected inventory draw or geopolitical developments in countries like Venezuela or Nigeria could lift prices temporarily, while additional evidence of weakening demand might lead to further declines.

In the longer term, a recent Wood Mackenzie outlook projects that global oil consumption will continue to expand until at least 2032. The consultancy warns that the pace of the global energy transition remains slow and that the world is falling short of Paris Agreement targets. Despite rising investment in renewable energy, fossil fuels—oil, gas, and coal—still supply roughly 80% of total primary energy because of their affordability, reliability, and entrenched role in global systems. The report also points out that renewable sources such as solar and wind face operational challenges, including variable output and higher real costs when backup and storage are considered.