Oil eked out gains, rebounding slightly from the previous trading day’s sharp slump as traders weighed the outlook for a record surplus against supply risks from US sanctions.
West Texas Intermediate rose 0.3% to settle under $59 a barrel after losing almost 4.2% on Wednesday, its biggest drop since June. Expectations for a long-awaited surplus were bolstered when the International Energy Agency flagged a deteriorating outlook for a sixth consecutive month, saying in a report on Thursday that supply will exceed demand by just over four million barrels a day next year.
Hours later, a US government report showed crude inventories rose 6.4 million barrels last week, the biggest increase since July and markedly higher than expected.
Both announcements came a day after producer group OPEC — which has been restoring idled capacity this year — said that global supply had topped demand in the third quarter, flipping its earlier estimate for the period from a shortfall.
The bearish outlook for next year has weighed on oil prices afresh in recent days, with a key indicator — WTI’s prompt spread — sinking into contango. That pricing pattern, with the nearest contracts trading at discounts to further-out ones, signals ample short-term supplies, though it also clawed back into bearish territory on Thursday.
At the same time, the Trump administration has moved to raise the pressure on Russia to end the war in Ukraine, including sanctions on Rosneft PJSC and Lukoil PJSC. With days to go until sanctions fully kick in, The Carlyle Group Inc. is exploring its options to buy Lukoil’s foreign assets, Reuters reported.
And bearish momentum on the news of rising US crude inventories was in part undercut by indications that product inventories fell across the board while exports picked up, a sign of resilient consumption at home and across the globe.
It’s still a question of whether that demand will be enough to absorb a widely-expected influx of excess supplies. Crude has retreated this year amid rising supplies from OPEC and its allies including Russia, as well as production increases from drillers outside the alliance. WTI capped a third monthly loss in a row in October, and has lost ground so far in November.
“There’s a lot of oil supply that’s coming back from the OPEC+ countries,” Chevron Corp. Chief Executive Officer Mike Wirth told Bloomberg Television. “There’s a period of time when it would appear we’re going to see more supply coming into the market than demand will be able to absorb.”
“The latest round of sanctions appear significant and there’s clear risk to supply,” Toril Bosoni, head of the oil markets division at the International Energy Agency, said in a Bloomberg TV interview.
That, coupled with Ukraine attacks against Moscow’s energy infrastructure, has helped to support fuel prices and offer a support to oil markets otherwise weighed down by oversupply fears. This year’s surge in OPEC+ output has been driven by alliance leader Saudi Arabia, although members have signaled they will pause further hikes in the first quarter of 2026.
Ahead of that, Saudi Arabia’s Crown Prince Mohammed bin Salman is set to meet President Trump at the White House next week.
Even with the OPEC+ halt to hikes in the coming quarter, there’ll still be a surplus of 3.82 million barrels a day in that period, up from 2.89 million in the final quarter of this year, according to projections from BloombergNEF.
Oil Prices
WTI for December delivery rose 0.34% to settle at $58.69 a barrel in New York.
Brent for January settlement was 0.3% higher to settle at $63.01 a barrel.
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