Crude oil prices are expected to decline this week due to the hypothetical possibility of a peace agreement between the US and Russia, which could lead to a rebound in Russian oil exports and contribute to a predicted supply glut.
The International Energy Agency has revised its demand growth estimates downwards for both this year and 2026, while the U.S. Energy Information Administration reported an increase in crude oil inventories.
Further pressure on oil prices comes from renewed trade tensions between the United States and China, which are expected to negatively impact global economic growth and, consequently, oil demand.
Crude oil prices are set for another weekly decline today, after President Trump announced there were plans to meet with Russia’s Vladimir Putin in a couple of weeks to discuss an end to the war in the Ukraine.
The hypothetical possibility of peace has ha traders prepare for a rebound in Russia oil exports, which would add to what most observers are calling a looming supply glut. This pressured prices further, after the IEA updated its glut prediction, now expecting the supply overhang to reach 2.4 million barrels daily in 2026, after adding 3 million bpd this year.
At the time of writing, Brent crude was trading at $60.84, and West Texas Intermediate was changing hands for $57.29 per barrel, both on course to shed some 3%, Reuters reported.
“Concerns of tighter supplies were eased after it was announced that Trump would be meeting with Putin to discuss ending the war in Ukraine,” ANZ analyst Daniel Hynes said, as quoted by Reuters.
Meanwhile, the International Energy Agency said demand for crude this year would only rise by 700,000 barrels daily, and by the same amount in 2026. This was a downward revision from last month’s demand growth estimate of 740,000 barrels daily.
The U.S. Energy Information Administration also had a bearish message for oil market watchers, reporting an estimated inventory build of 3.5 million barrels for the week to October 10, following a build of 3.7 million barrels in the previous week. The fact that the build was a least in part caused by refineries going into seasonal maintenance did not affect sentiment.
In further bad news for oil bulls, the latest flare-up between the United States and China on trade led traders to suspect a fallout that would hurt the growth prospects of the global economy, implying an adverse effect on oil demand as well.
By Irina Slav for Oilprice.com
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