Oil Plunges, Is the World Returning to an Era of Surplus?
World oil prices continue to weaken after previously plummeting by more than 4%. West Texas Intermediate (WTI) crude is now around $58 per barrel, while Brent has fallen below $63. This decline occurred after OPEC reported that global oil supply exceeded demand in the third quarter. This condition indicates that the long-awaited oil surplus is finally starting to be felt in the market.
Signs of oversupply are also evident in changes in price patterns in the oil market. The WTI prompt spread briefly moved into contango, a situation where oil prices for future delivery are higher than current prices—a sign of abundant short-term supply. Furthermore, the US Energy Information Administration (EIA) also raised its forecast for US oil production for next year, adding pressure on global prices.
This oversupply is largely due to increased production from OPEC+ member countries such as Russia, as well as other producers outside the alliance. Chevron CEO Mike Wirth said that much oil supply is returning to the market after being held back. Analysts predict that price pressures could continue if the International Energy Agency's (IEA) monthly report signals a larger surplus. The energy world is now waiting to see whether this trend will continue, leading to the largest oversupply in years. (az)
Source: Newsmaker.id
