UPDATE: Oil prices are falling sharply in early trading today, with West Texas Intermediate (WTI) dropping to around $58.5 per barrel, a decline of more than 4% from yesterday’s session. This significant downturn is fueled by revised surplus expectations from OPEC and a concerning inventory report from the American Petroleum Institute (API).
The market is reacting to OPEC’s latest report, which shows an unexpected supply surplus as production increases both from within the OPEC+ alliance and from external producers. ING commodity experts Ewa Manthey and Warren Patterson noted that WTI’s prompt time-spread has flipped to contango for the first time since February, indicating rising oversupply concerns.
In its monthly oil market report released earlier today, OPEC maintained its global oil demand growth forecasts at 1.3 million barrels per day (b/d) for this year and 1.4 million b/d for 2026. However, it now anticipates a small supply surplus in 2026 due to increased production from OPEC+ and other countries.
OPEC also reported a marginal increase in output of just 33,000 b/d month-over-month to 28.5 million b/d in October, which is 450,000 b/d lower than its initial production quotas. This limited increase is attributed to higher output from Saudi Arabia, Kuwait, Iraq, and Nigeria, countered by losses from Iran and Libya.
Compounding these concerns, the API disclosed that US crude oil inventories rose by 1.3 million barrels last week, while stocks in Cushing saw a slight decrease of 43,000 barrels. This news signals a troubling trend for supply levels in the US, with the Energy Information Administration (EIA) expected to release its own monthly report later today.
The EIA has already adjusted its forecasts, increasing US crude oil production estimates for both this year and next. It now projects production to average around 13.59 million b/d in 2025, up from a previous estimate of 13.53 million b/d. For 2026, the estimate has also risen to 13.58 million b/d.
As oil prices drop, analysts warn of potential impacts on global markets and economies heavily reliant on oil revenues. Investors are urged to keep a close watch on today’s EIA report for further insights into US production trends and inventory levels.
This developing situation underscores the volatility in the oil market, as supply and demand dynamics continue to shift dramatically. Stay tuned for more updates as the EIA report is expected to provide crucial data that could further impact oil prices.
