Oil prices set for second straight weekly decline on growing signs of supply surplus

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GLOBAL-OIL:Oil prices set for second straight weekly decline on growing signs of supply surplus

HOUSTON, Nov 13 (Reuters) - Oil prices sagged on Friday, set for a second straight weekly decline, as signs of a growing global supply surplus weighed on the market and Washington's focus on blockading Iran while ramping up other economic pressures allayed fears of renewed hostilities in the nine-month war.

Brent futures were down 5 cents, or 0.05%, to $95.77 a barrel at 11:46 a.m. CDT (1746 GMT). US West Texas Intermediate futures fell 17 cents, or 0.19%, to $88.57 a barrel.

For the week, Brent and WTI were both on track for a drop of around 2%. The benchmarks fell 16% and 13%, respectively, last week.

With lower geopolitical risk from the US-Israeli war against Iran and the release on Friday of an International Energy Agency report pointing to a rise in the global oil surplus, the market is going through a major shift.

"It's clear the biggest fear a few months ago was a fear of shortage," said Phil Flynn, senior analyst with the Price Futures Group. "Now it looks like the biggest fear is a surplus."

Oil had a volatile trading week, with earlier hopes for a rapprochement between the US and Iran offset by strikes on Saudi Arabian infrastructure by Yemen's Iran-backed Houthis and attacks on tankers shipping crude out of the Gulf.

US President Donald Trump said on Truth Social that a deal with Iran was not necessary to end the war.

"Trump's indications that further military escalation against Iran may not be necessary have raised expectations that Washington could increasingly rely on economic sanctions and restrictions on oil shipments rather than intensifying military operations," said Sugandha Sachdeva, founder of SS WealthStreet, a New Delhi-based research firm.

The weakness in oil prices is also driven largely by signs of softening US demand, as rising crude oil and fuel inventories indicate a relatively subdued consumption outlook, Sachdeva said.

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