Oil prices continued to inch lower in early Tuesday trading as concerns about oversupply and sagging demand resumed their grip on the market, even as trade-talks between the United States and China offered a glimmer of optimism.
At the time of writing, WTI was down 0.52% at $57.22, while Brent had fallen 0.54% to $60.61. Weakness in the oil market is anchored by growing evidence that the global supply-demand balance is shifting toward a surplus. The International Energy Agency recently flagged the potential for a crude oil surplus of nearly 4 million barrels per day in 2026 as production growth from both OPEC+ and non-OPEC producers accelerates while demand growth remains muted.
Technically, the structure of the market is also flashing caution. The Brent futures curve has reverted to contango, where contracts for later delivery trade at a premium to prompt-delivery contracts, which points to expectations of loose supply or weak demand in the near term.
On the demand side, tensions between the world’s two largest oil consumers, the U.S. and China, are weighing heavily. While President Trump expressed optimism about reaching “a very strong trade deal” with President Xi, underlying frictions remain unresolved, including on tariffs, technology access, and supply-chain issues. These unresolved matters continue to cloud China’s economic outlook and, by extension, oil demand.
China’s crude oil flows also signal softness, with imports in September falling to about 11.5 million barrels per day, the lowest level since January, and refinery throughput climbing which reduces the spare capacity for imports and stock-building.
Looking ahead, unless demand signals improve significantly or major supply disruptions emerge, the path for oil appears tilted to the downside. Brent is now testing the psychologically important $60 mark, with the potential that a break below that could open the door to even lower levels. The combination of rising supply, weak demand, and fragile trade relations leave little room for bullish sentiment in today’s oil markets.
By Charles Kennedy for Oilprice.com
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