UPDATE: Oil prices are in freefall as fears of a supply glut grip the market. NYMEX WTI crude oil has plunged more than 4% to settle at approximately $58.50 per barrel during early trading today, following a significant drop yesterday.
The decline stems from OPEC’s revised surplus expectations for the global oil market, compounded by a bearish inventory report from the American Petroleum Institute (API). This morning, WTI’s prompt time-spread flipped to contango for the first time since February, signaling an alarming rise in oversupply both within and outside the OPEC+ alliance, according to commodity experts Ewa Manthey and Warren Patterson from ING.
OPEC’s latest monthly report maintains its global oil demand growth forecast at 1.3 million barrels per day (b/d) for this year and 1.4 million b/d for 2026. However, the organization has altered its outlook on supply, now anticipating a slight surplus in 2026 due to increased production from both OPEC+ members and non-OPEC countries, particularly the US, Canada, Brazil, and Argentina.
In October, OPEC’s supply saw a modest increase of just 33,000 b/d, bringing total output to 28.5 million b/d, which is 450,000 b/d less than their initial quota plans. This increase was partially offset by production losses from Iran and Libya.
Adding to the bearish sentiment, the API reported that US crude inventories rose by 1.3 million barrels over the last week, while stocks in Cushing dropped slightly by 43,000 barrels. In response, the Energy Information Administration (EIA) has raised its US crude production growth estimates, now forecasting an average of 13.59 million b/d in 2025, up from a prior estimate of 13.53 million b/d. The EIA expects US oil supply to average 13.58 million b/d in 2026.
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 further influence trading dynamics.
With oil prices dropping sharply, market participants are urged to monitor these developments closely. Expect heightened volatility in oil prices as more data emerges and analysts reassess their projections amid this evolving crisis.
