UPDATE: Oil prices are taking a sharp dive, with West Texas Intermediate (WTI) falling over 4% to settle at approximately $58.5 per barrel yesterday. This significant decline continues in early trading today, primarily fueled by OPEC’s revised surplus expectations and a bearish inventory report from the American Petroleum Institute (API).
As of this morning, WTI is under pressure, reflecting mounting fears of an oversupply in the global oil market. Notably, the WTI’s prompt time-spread has shifted to contango for the first time since February, signaling increased supply concerns, as highlighted by ING commodity experts Ewa Manthey and Warren Patterson.
In its latest oil market report, OPEC has maintained its global oil demand growth forecasts at 1.3 million barrels per day (b/d) for this year and 1.4 million b/d for 2026. However, it now anticipates a small supply surplus by 2026, largely due to increased production from both OPEC+ members and external producers.
OPEC’s adjustments also show a modest increase in production, rising by 33,000 b/d month-on-month to 28.5 million b/d in October. This figure is notably 450,000 b/d below the initial production increase plan. The output changes from major producers like Saudi Arabia, Kuwait, Iraq, and Nigeria were partly offset by losses from Iran and Libya.
Adding to the concerns, the latest API data reveals that U.S. crude oil inventories rose by 1.3 million barrels last week, while stocks in Cushing saw a slight decline of 43,000 barrels.
The U.S. Energy Information Administration (EIA) has also revised its crude oil production estimates upward, projecting an average production of 13.59 million b/d in 2025, an increase from the previous estimate of 13.53 million b/d. For 2026, the expected average is 13.58 million b/d, up from 13.51 million b/d previously.
Despite the production increases, the EIA forecasts U.S. petroleum consumption to remain flat at around 20.5 million b/d for both this year and 2026, raising concerns about demand sustainability in light of the oversupply.
As the market reacts to these developments, the International Energy Agency (IEA) is set to release its monthly oil market report later today, which could provide further insights into the evolving dynamics of the oil sector.
Market watchers and investors are urged to stay alert as these developments unfold, impacting not just oil prices but the broader economic landscape.
