Oil Steadies After 4% Tumble on Signs Global Glut Has Arrived
Oil steadied after slumping on Wednesday on signs that a long-awaited oversupply has finally arrived, with the International Energy Agency again raising its forecast for a record surplus.
Global benchmark Brent traded below $63 a barrel after losing almost 4% in the previous session, while West Texas Intermediate was near $58. The IEA flagged a deteriorating outlook for a sixth consecutive month, saying in a report on Thursday that supply will exceed demand by just over four million barrels a day next year.
Producer group OPEC — which has been restoring idled capacity this year — said a day earlier that global supply had topped demand in the third quarter, flipping its earlier estimate for the period from a shortfall.
The bearish outlook has started to weigh on oil afresh in recent days, with a key indicator — WTI’s prompt spread — sinking into contango. That pricing pattern, with the nearest contracts trading at discounts to further-out ones, signals ample short-term supplies. The US Energy Information Administration raised its US production forecast for next year.
Crude has retreated this year on widespread expectations for a glut. The slump has been driven by rising supplies from OPEC and its allies including Russia, as well as production increases from drillers outside the alliance. Brent capped a third monthly loss in a row in October, and has lost ground so far in November.
Meanwhile, the Trump administration has also moved to raise the pressure on Russia to end the war in Ukraine, including sanctions on Rosneft PJSC and Lukoil PJSC. That, coupled with Ukraine attacks against Moscow’s energy infrastructure, has helped to support fuel prices.
This year’s surge in OPEC+ supply has been driven by alliance leader Saudi Arabia, although members have signaled they will pause further hikes in the first quarter of 2026. Ahead of that, Saudi Arabia’s Crown Prince Mohammed bin Salman is set to meet President Trump at the White House next week.
Even with the OPEC+ halt to hikes in the coming quarter, there’ll still be a surplus of 3.82 million barrels a day in that period, up from 2.89 million in the final quarter of this year, according to projections from BloombergNEF.
Brent for January settlement was 0.4% higher at $62.98 a barrel at 10:27 a.m. in London. WTI for December delivery traded at $58.73 a barrel.
Source : Bloomberg.com
