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Oil prices hit five-month lows amid gloomy demand outlook and supply concerns
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Hello everyone, today XM Forex will bring you "[XM Foreign Exchange Market xn--xm-5s9cx14e.commentary]: The bleak demand outlook coupled with supply concerns, oil prices hit a five-month low". Hope this helps you! The original content is as follows:
The international crude oil market suffered a heavy blow this week, with prices falling sharply and hitting the lowest closing price in the past five months. The core focus of the market is that at a time when the latest round of trade protectionist threats from the US President has triggered deep concerns about global crude oil demand, the increase in the supply side and the easing of geopolitical risks have formed a strong bearish synergy. Investors are quickly shifting their attention from earlier geopolitical premiums to more structural supply and demand fundamentals: the oil market may face the challenge of oversupply in the context of increasing uncertainty about global economic growth.
Review of crude oil market trends this week
During the week from October 6 to October 11, 2025, international crude oil prices showed an overall weak downward trend, and recorded a sharp decline over the weekend. Among them, Friday's sell-off was particularly noticeable.
The continuous contract of Brent crude oil has fallen significantly this week. Especially at the close of trading on Friday, the decline reached 4.67%, finally settling at $65.16 per barrel. This price is a low that Brent crude oil has not hit since May this year.
The U.S. crude oil continuous contract (WTI) fell even more fiercely, reflecting the North American market's pessimistic expectations for short-term demand. The WTI contract fell 5.33% on Friday, closing at $61.52 a barrel. During the session, WTI prices once fell below the important psychological mark of $60, hitting as low as $58.22 per barrel, showing the spread of market panic and the rapid unwinding of long positions.
From the technical chart, (as shown in the attached picture), the sharp decline in oil prices broke the shock range of the previous few months, and technical indicators such as MACD weakened rapidly, showing that the market situationSentiment has shifted from balanced to clearly bearish dominance.
Main events and economic data driving the market
This week's sharp correction in crude oil prices is not caused by a single factor, but the result of the interaction of multiple macroeconomic and geopolitical events.
1. Tariff threats and concerns about demand prospects (impact of Trump’s policies)
The most direct and important catalyst for this round of selling xn--xm-5s9cx14e.comes from the new round of tariff threats issued by US President Trump. This move quickly triggered a rise in risk aversion in the financial market, especially for crude oil, a xn--xm-5s9cx14e.commodity that is closely linked to global trade and economic activities. The impact was the most severe.
There is widespread concern in the market that the trade protectionist measures implemented by the U.S. government will further weaken the momentum of global economic growth and ultimately suppress demand in the world's largest crude oil consumer. In the context of a possible oversupply in the crude oil market, any signal about a weakening demand outlook will be amplified and trigger a chain reaction.
2. Geopolitical risk mitigation
In the Middle East, an important risk premium factor has been eliminated. Israel and the Palestinian militant group Hamas signed a ceasefire agreement on Thursday, the first phase of the U.S. president's push to end the conflict in Gaza. The reaching of this ceasefire agreement was interpreted by the market as a significant reduction in geopolitical risks. The geopolitical uncertainty premium that had previously supported oil prices quickly faded, prompting investors to return their focus to supply and demand fundamentals.
In addition, although it does not directly affect the oil-producing areas of the Middle East, market sentiment remains sensitive to ongoing geopolitical tensions in Eastern Europe. Traders are paying close attention to the development of the situation in the region. This continued risk aversion still restrains large-scale long willingness to a certain extent, but its boosting effect on oil prices has been much less than before.
3. Increase in global supply and OPEC production policy
The increase in the supply side of crude oil is a structural factor that continues to suppress oil prices. First, the Organization of the Petroleum Exporting Countries (OPEC) is gradually withdrawing from previous production cuts, and its production is slowly recovering. Secondly, additional supply growth from non-OPEC oil-producing countries such as North America and South America continues to pour into the market. This makes the originally balanced market structure tend to be prone to abundant supply or even excess.
4. Risk of U.S. government shutdown
Investors are also wary of domestic political uncertainty in the United States. Concerns that the U.S. government may be shut down for a long period of time have triggered concerns that the U.S. economy, the world's largest consumer of crude oil, may be weakened as a result. While this is not directly economic data, this macro uncertainty is fueling pessimistic forecasts for the outlook for U.S. crude oil demand.
Summary of analyst and institutional views
Senior market analysts and major financial institutions expressed their views on this week's plunge in oil prices and its driving factors. Their views mainly focused on the deterioration of demand expectations and concerns about oversupply:
UBS
UBS analyst GiovanniStaunovo said that the current round of selling in the crude oil market was directly caused by a new round of tariff threats issued by US President Trump, which triggered a rapid increase in market risk aversion in a short period of time. This shows that macro policy risks play an obvious leading role in short-term oil price trends.
Lipow Oil Associates
Andrew Lipow, president of Lipow Oil Associates, pointed out that Friday’s drop was the result of multiple factors, and the U.S. President’s threat to significantly increase tariffs was just the latest inducement. He highlighted the xn--xm-5s9cx14e.combination of OPEC production increases, continued growth in additional supply from North and South America, and the easing of geopolitical risks following the Gaza ceasefire agreement on top of the tariff threat, which xn--xm-5s9cx14e.combined to create a bearish market logic.
Australia and New Zealand Bank (ANZ)
ANZ analyst Daniel Hynes believes that with the signing of the ceasefire agreement in Gaza, the market's focus is quickly shifting back to the upcoming oil supply glut. He added that as OPEC is gradually withdrawing from its previous production reduction policy, supply-side pressure will become a key variable that dominates oil price trends in the xn--xm-5s9cx14e.coming period.
Market Outlook for Next Week
The dramatic performance of the crude oil market this week has clearly sent a signal to the market: the pricing logic of global crude oil is returning from the geopolitical risk premium to the fundamentals of supply and demand dominated by the global trade environment. Prices fell sharply during the week to a five-month low. The core focus is that the U.S. President's trade protectionist measures have significantly worsened expectations for global economic growth and crude oil demand.
The market is weighing the following main contradictions: on the one hand, the gradual return of output from OPEC and its allies, coupled with the continued increase in non-OPEC output; on the other hand, the risk of slowing demand growth in the world's largest economy due to political uncertainty and trade tensions. Looking ahead to next week, investors will continue to pay attention to the progress of trade negotiations among the world's major economies, the resolution of the risk of the U.S. government shutdown, and the latest signals that OPEC may send in response to the current price trend.
With an uncertain demand outlook and steadily rising supply, oil prices are likely to remain under pressure in the short term unless there are new, strong supply disruptions.
The above content is all about "[XM Foreign Exchange Market xn--xm-5s9cx14e.commentary]: The demand outlook is bleak and supply concerns are xn--xm-5s9cx14e.compounded, and oil prices hit a five-month low". It was carefully xn--xm-5s9cx14e.compiled and edited by the XM Foreign Exchange editor. I hope it will be helpful to your trading! Thanks for the support!
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