Oil Prices Rebound on Softer Dollar but Head for Weekly Loss Amid Oversupply Concerns

Oil prices climbed in Asian trading on Friday, rebounding slightly after recent declines as a weaker U.S. dollar offered temporary relief. However, fears of oversupply and slowing global demand continued to weigh on the market, keeping crude on track for its second consecutive weekly loss.

Brent crude futures for January rose 0.4% to $63.65 per barrel, while West Texas Intermediate (WTI) crude gained 0.4% to $59.54 by 20:08 ET (01:08 GMT). Despite the short-term boost, both benchmarks remained set for weekly declines of about 2.3% and 1.8%, respectively, reflecting persistent bearish sentiment in the energy market.

The dollar’s weakness provided brief support for oil prices. A softer greenback makes dollar-denominated commodities more affordable for international buyers, encouraging demand. The currency slipped after private economic data indicated cracks in the U.S. labor market, fueling speculation that the Federal Reserve might consider a rate cut in December. With the prolonged U.S. government shutdown delaying key economic reports, traders turned to private indicators for guidance, heightening uncertainty over the nation’s economic outlook.

Still, concerns over a cooling U.S. economy limited oil’s upside potential. The world’s largest consumer of fuel faces potential demand disruptions as the shutdown continues to affect key sectors, including air travel. The Trump administration’s decision to reduce flights by 10% across 40 major airports added to worries about weaker fuel consumption.

Meanwhile, oversupply fears persisted after the Organization of the Petroleum Exporting Countries and its allies (OPEC+) increased production by 3 million barrels per day in 2025. Although the group pledged to pause further hikes in early 2026, traders expect markets to remain well-supplied next year. Additionally, U.S. inventory data showing a surprise stockpile build reinforced the bearish outlook for crude prices.