Oil prices are headed for a second weekly decline as concerns over a growing oversupply outweigh geopolitical risks to supply.

Brent crude edged up to $60 a barrel on Friday but is still down about 2% for the week, while West Texas Intermediate is trading near $56 a barrel. Ukraine attacked an oil tanker linked to a shadowy Russian fleet in the Mediterranean Sea, a new escalation in a series of attacks on ships that help Moscow export oil.

Despite these risks, nearly all of the world's largest traders see the market in oversupplied territory by early next year, with industrial giant Trafigura Group forecasting Brent in the $50s until mid-2026, before recovering later in the year.

Oil prices have fallen by about a fifth this year as OPEC+ returns barrels faster than expected and producers elsewhere pump more, while demand remains sluggish. Geopolitical risks, particularly surrounding supply from Russia and Venezuela, have helped cushion some of the decline.

"The dominant sentiment right now is clearly a structural surplus," said Haris Khurshid, chief investment officer at Karobaar Capital LP in Chicago. "That oversupply mindset is trumping geopolitical turmoil from Russia to Venezuela."

Oil trading activity is thin ahead of the Christmas and New Year holidays, which can cause price fluctuations. The aggregate volume of Brent contracts traded was below average for that time of year on Friday.

Brent for February rose 0.5% to $60.12 per barrel as of 12:53 p.m. in London. WTI for February rose 0.5% to $56.44 per barrel. January futures expire on Friday. (alg)

Source: Bloomberg