Crude oil prices traded defensively this week as bearish fundamentals overshadowed short-term risk catalysts. While geopolitical tensions and the end of the U.S. government shutdown offered fleeting support, the market remained focused on rising global inventories, shifting supply-demand expectations from OPEC and the IEA, and a broader sense that supply continues to outpace demand. West Texas Intermediate (WTI) futures fell sharply midweek before stabilizing at $58.12, a level that may act as psychological support in the short term.
Large U.S. Inventory Build Pressures Prices
The most immediate bearish catalyst came from U.S. stockpile data. The Energy Information Administration (EIA) reported a massive 6.4 million barrel build in domestic crude inventories for the week ending November 7, far exceeding analyst expectations of a 1.96 million barrel increase. The American Petroleum Institute (API) had earlier flagged a 1.3 million barrel build, but the EIA’s number confirmed growing concerns about a supply glut.
The data hit the market just as crude attempted to stabilize above recent lows, triggering a sharp sell-off that pushed WTI more than $2 lower on Wednesday. The inventory build also highlighted a broader trend across global storage hubs, with reported increases in Europe, Singapore, and the UAE’s Fujairah, signaling barrels are increasingly struggling to find end demand.
OPEC and IEA Acknowledge 2026 Supply Surplus
Compounding the bearish…
Crude oil prices traded defensively this week as bearish fundamentals overshadowed short-term risk catalysts. While geopolitical tensions and the end of the U.S. government shutdown offered fleeting support, the market remained focused on rising global inventories, shifting supply-demand expectations from OPEC and the IEA, and a broader sense that supply continues to outpace demand. West Texas Intermediate (WTI) futures fell sharply midweek before stabilizing at $58.12, a level that may act as psychological support in the short term.
Large U.S. Inventory Build Pressures Prices
The most immediate bearish catalyst came from U.S. stockpile data. The Energy Information Administration (EIA) reported a massive 6.4 million barrel build in domestic crude inventories for the week ending November 7, far exceeding analyst expectations of a 1.96 million barrel increase. The American Petroleum Institute (API) had earlier flagged a 1.3 million barrel build, but the EIA’s number confirmed growing concerns about a supply glut.
The data hit the market just as crude attempted to stabilize above recent lows, triggering a sharp sell-off that pushed WTI more than $2 lower on Wednesday. The inventory build also highlighted a broader trend across global storage hubs, with reported increases in Europe, Singapore, and the UAE’s Fujairah, signaling barrels are increasingly struggling to find end demand.
OPEC and IEA Acknowledge 2026 Supply Surplus
Compounding the bearish tone was a shift in guidance from OPEC. In its latest monthly oil market report, the producer group revised its supply-demand forecast for 2026, projecting that global oil supplies will slightly exceed demand—marking a reversal from prior estimates of a deficit. OPEC attributed the surplus to increased production from its own members and allied producers under the OPEC+ umbrella, including Russia.
The International Energy Agency (IEA) reinforced that view on Thursday, raising its global oil supply growth forecasts for both 2025 and 2026. The agency now sees inventories continuing to build through the mid-decade period, reflecting ongoing production gains that are not being matched by demand growth. Meanwhile, the U.S. EIA’s Short-Term Energy Outlook forecast a larger-than-expected increase in U.S. production this year, setting the stage for even more supply pressure into early 2025.
Together, these reports have undercut the longer-term bullish narrative and are forcing traders to reassess the balance outlook. DBS Bank’s Suvro Sarkar noted that OPEC’s revised stance “confirms the group is now acknowledging the possibility of a supply glut in 2026,” in contrast to its historically more optimistic tone.
Lukoil Sanctions Create Short-Term Uncertainty
Geopolitical tensions added some complexity to the supply picture. The U.S. government imposed fresh sanctions on Russia’s Lukoil, with a deadline of November 21 for companies to sever business ties. The move has raised concerns about short-term disruptions to Russian oil flows, particularly for refined products.
Lukoil has already declared force majeure at one of its Iraqi oil fields, underscoring the sanctions’ potential operational impact. Product markets reacted swiftly: European diesel margins surged to a 21-month high above $31.50 per barrel, while gasoline crack spreads also firmed. However, the crude complex itself failed to sustain a rally, reflecting a belief that upstream flows remain largely intact for now.
Still, some analysts believe the $60 level could offer temporary support to crude if sanctions lead to logistical hiccups or near-term export reductions. Sarkar noted that “there should be considerable support to oil prices around $60/bbl” due to the potential for such disruption.
Government Reopening Offers Demand-Side Hope
On the demand side, the end of the historic 40-day U.S. government shutdown offered a modestly supportive backdrop. More than one million federal workers are now returning to work, and the resumption of normal operations could aid in consumer activity, air travel, and energy usage ahead of the holiday season.
Carl Larry of Enverus suggested that the return of the federal workforce “is going to help support demand in the near term,” pointing to improved travel expectations and a potential rebound in fuel consumption. However, this demand lift may take time to materialize and is unlikely to offset the growing inventory overhang in the short run.
Weekly Light Crude Oil Futures
Trend Indicator Analysis
Light crude oil futures are on track to finish the week lower after failing to confirm a recent closing price reversal bottom for the third time. As of Thursday’s close, the market is trading at $59.07, down $0.68 or -1.15%.
The market is also trading on the weakside of a key 61.8% level at $59.44, but catching a small bid in front of a minor 50% level at $58.27. Renewed selling pressure on Friday and into next week could trigger a further break into a pair of bottoms at $55.96 and $55.27
Overcoming the Fib level at $59.44 will signal the return of buyers. If they are able to generate enough upside pressure then we could see a drive into the 52-week moving average at $62.24, which is currently providing resistance and control the downtrend.
Weekly Technical Forecast
The direction of the weekly Light Crude Oil Futures market for the week ending November 21 is likely to be determined by trader reaction to the 61.8% retracement level at $59.44 and the minor pivot at $58.28.
Bullish Scenario
A sustained move above the Fibonacci level at $59.44 will signal renewed buying interest. If this move generates sufficient upside momentum, a retest of the 52-week moving average at $62.24 could follow.
Bearish Scenario
A sustained move below the short-term pivot at $59.27 will indicate active selling pressure. This could trigger a sharp decline toward $55.96, with potential for an extended move down to $55.27 or lower.
Crude Oil Prices Forecast: Market Faces Bearish Fundamentals Despite Sanctions Risk
Looking ahead to next week, the crude oil outlook remains firmly bearish from a fundamental standpoint. The overwhelming theme continues to be oversupply, reinforced by outsized U.S. inventory builds, rising global stockpiles, and projections of a 2026 surplus from both OPEC and the IEA.
While the Lukoil sanctions and ongoing Russian geopolitical risk provide a layer of uncertainty, these have so far had more impact on refined product markets than crude itself. Unless export disruptions materialize, supply flows appear sufficient to meet current and projected demand.
The U.S. government’s reopening and potential rebound in consumer activity may lend modest support, but with refinery maintenance season winding down and no major demand shock on the horizon, supply remains the dominant driver.
With no clear catalyst to lift prices sustainably, traders are likely to continue fading rallies. Barring a surprise drawdown in inventories or a meaningful disruption to Russian exports, oil prices are expected to remain under pressure next week.
