UPDATE: Oil prices are in freefall today as concerns over a growing supply glut grip the market. West Texas Intermediate (WTI) crude has plunged over 4%, settling at approximately $58.50 per barrel, following alarming news from OPEC regarding surplus expectations.
This sharp decline comes on the heels of a bearish inventory report from the American Petroleum Institute (API), which revealed a surprising increase in U.S. crude oil inventories by 1.3 million barrels last week. As WTI continues to slide in early trading, analysts warn of a significant oversupply that could worsen.
Experts from ING highlight a troubling shift in the market dynamics, as WTI’s prompt time-spread has flipped to contango for the first time since February. This indicates a growing oversupply, raising alarms about the balance of the global oil market.
OPEC’s latest monthly report maintains its forecasts for global oil demand growth at 1.3 million barrels per day (b/d) for this year and 1.4 million b/d for 2026. However, supply projections from non-OPEC producers are set to surge by 920,000 b/d this year, largely due to increased output from the U.S., Canada, Brazil, and Argentina.
Despite a minor increase in OPEC’s supply by 33,000 b/d month-on-month to 28.5 million b/d in October, this remains 450,000 b/d below initial production quota plans. Gains from countries like Saudi Arabia, Kuwait, Iraq, and Nigeria were offset by losses from Iran and Libya.
The International Energy Agency (IEA) is set to release its monthly oil market report later today, which is highly anticipated given the current volatility. Investors are keen to see if the IEA will echo OPEC’s concerns about oversupply.
In related news, the Energy Information Administration (EIA) has raised its U.S. crude oil production growth estimates, projecting an average of 13.59 million b/d in 2025. This is an increase from previous estimates, signaling robust production levels amid rising global supply challenges.
The EIA also reported that U.S. petroleum consumption is expected to remain flat at around 20.5 million b/d, raising further questions about the sustainability of current production levels.
As the oil market navigates these turbulent waters, all eyes are on the impending IEA report, which could significantly impact trading strategies and market sentiment. Investors are advised to stay alert as developments unfold.
For real-time updates and detailed insights, follow our coverage on this developing story.
