Oil Falls, IEA Highlights Oversupply
Oil prices remain weak. WTI is approaching $62 per barrel after falling 2% on Thursday, while Brent is hovering above $66. Sentiment is being weighed down by the IEA's projection of a larger supply surplus next year.
The IEA sees the oversupply set to break records. This projection comes after OPEC+ decided to increase production starting in October, albeit gradually. This outlook offsets geopolitical concerns from the Middle East to Europe.
Thursday's decline broke a three-day rally. Previously, prices had been boosted by Israel's attack on Hamas leaders in Doha and the incident of a Russian drone over Poland. Comments by President Donald Trump also triggered short-covering, which emerged at the time.
On a year-over-year basis, oil futures contracts are still down. The main pressure comes from the already visible surplus. The EIA said oversupply has already occurred and the buildup could potentially increase this quarter.
Source: Bloomberg