International oil prices fell slightly in early trading on Friday, with market sentiment weak as investors digested complex changes in energy supply and geopolitical dynamics. Brent crude futures fell 0.13% to $60.98 per barrel, while U.S. West Texas Intermediate (WTI) crude futures fell 0.12% to $56.92.

On a weekly basis, both major crude oil benchmarks have fallen by approximately 3%. Market participants noted that the latest report released by the International Energy Agency (IEA) indicated a potential global energy market oversupply by 2026, prompting investors to lower their medium- and long-term oil price expectations.

On the other hand, the upcoming diplomatic meeting between the United States and Russia has become an important turning point in the oil market this week. The leaders of the United States and Russia plan to meet in Budapest in two weeks to discuss the possibility of ending the conflict in Ukraine.

This news has somewhat eased the market's previous concerns about limited energy supply. ANZ Bank analyst Daniel Hynes noted: "Following the announcement of the meeting, market concerns about tight supply have eased, which has led to a lack of upward momentum for oil prices in the short term."

Meanwhile, the latest data from the U.S. Energy Information Administration (EIA) showed that U.S. crude oil inventories rose by 3.5 million barrels to 423.8 million barrels last week, far exceeding market expectations of a 288,000-barrel increase. The unexpected increase in inventories was mainly due to a decrease in processing volume due to seasonal maintenance at refineries.

In addition, the EIA report also showed that US crude oil production rose to 13.636 million barrels per day, a record high. This production level reinforced the market's expectations of continued growth in US supply.

From a technical perspective, the daily chart of US crude oil shows that WTI prices have been trading below the 60-day moving average for several consecutive days, indicating a short-term weak consolidation pattern. After the price falls below $57, bearish sentiment may accelerate the downward trend, with the upper pressure range concentrated in the $58.8 to $59.5 range.

If the price fails to break out of this range, there is still a possibility of a short-term drop to $56. The technical indicator MACD continues to expand, indicating that the bearish momentum is dominant, while the RSI remains near 45, reflecting a cautious and wait-and-see market sentiment.

Editor's opinion:

Overall, the short-term oil market trend remains influenced by the dual forces of supply and demand and diplomatic dynamics. While potential geopolitical easing could help stabilize the market, supply growth, rising inventories, and the IEA's forecast for future production capacity expansion continue to keep the market cautious about rising oil prices.

If the diplomatic talks in the next two weeks can bring positive signals, oil prices may see a phased recovery before the end of the year, but the overall trend will still tend to be moderately downward.