Oil dropped by the most since June as a key market gauge flashed weakness and OPEC said global crude supplies surpassed demand sooner than anticipated.
West Texas Intermediate fell by 4.2% to settle around $58.50 a barrel, wiping out three sessions of gains. The US benchmark’s nearest timespread briefly traded in a so-called bearish contango structure — which means current oil prices are cheaper than contracts for delivery further out — for the first time since February, a fresh sign of the widely anticipated supply glut.
OPEC revised estimates for global oil markets to a third-quarter surfeit from a deficit as US production exceeded expectations and the group itself accelerated output. Worldwide oil supplies exceeded demand by 500,000 barrels a day during the period, the group said.
Crude is under pressure as timespreads weaken and OPEC’s outlook points to rising inventories, said Rebecca Babin, a senior energy trader at CIBC Private Wealth Group.
“The market also lacks a clear bullish catalyst — geopolitical risks have quieted and the macro backdrop isn’t providing much lift — leaving a bit of a vacuum to the downside,” she added.
In its monthly outlook released today, the US Energy Information Administration raised its daily 2026 US crude production forecast to 13.58 million barrels from 13.51 million.
Trend-following funds are also selling positions, reinforcing the long squeeze in oil.
“Whipsaw season persists, but we expect CTAs to imminently sell roughly 25% of their maximum size in WTI crude and 10% in Brent, in response to weakening trend signals,” said Dan Ghali, a commodity strategist at TD Securities. A sustained break below $58.50 in the US benchmark’s December contract may trigger further selling, he added.
Oil has lost ground this year on glut concerns, with the Organization of Petroleum Exporting Countries and its allies restoring capacity, and drillers outside the group raising production. The Paris-based IEA forecasts a record surplus next year, and banks including Goldman Sachs Group Inc. have warned of rising inventories.
Still, premiums have surged for refined fuels like gasoline and diesel, in part because of a slew of refinery outages, traders said, including attacks on Russian plants.
Against this backdrop, Russia’s Lukoil PJSC is seeking an extension to US sanctions grace periods after Washington imposed restrictions on the company along with Rosneft PJSC, Reuters reported.
Oil Prices
WTI for December delivery fell 4.2% to settle at $58.49 a barrel in New York.
Brent for January settlement dropped 3.8% to close at $62.71.
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