Crude oil ended its three-day winning streak as deteriorating market fundamentals outweighed concerns about potential supply disruptions from geopolitical risks.

WTI fell 2%, settling below $63 per barrel after the International Energy Agency (IEA) indicated that next year's record supply surplus is expected to worsen as OPEC+ continues production restoration while competing producers increase output.

Meanwhile, U.S. economic data revealed a surge in initial jobless claims, intensifying concerns about weakening labor market conditions in the world's largest economy.

The decline followed a three-day rally driven by tensions in the Middle East and Europe, with U.S. President Trump questioning Israel's attacks on Qatar.

Oil market traders have been broadly weighing geopolitical risks against supply increases, keeping crude prices range-bound between $62-67 per barrel since early August.

"On one hand, the market surplus is becoming apparent," said Toril Bosoni, head of IEA's oil markets division, "but at the same time, we're also seeing supply at risk."

WTI October futures dropped 2%, settling at $62.37 per barrel.

Brent November futures closed down 1.7% at $66.37 per barrel.