Crude Oil: WTI Remains Weak Amid Increasing Signs of Oversupply

Deep News
2025/10/21

Signs indicate a slight decline in crude oil prices as trade tensions ease, with traders observing an increasing amount of evidence that the long-anticipated oversupply is finally emerging. WTI remained largely unchanged, settling around $57 per barrel, as investors rolled over contracts ahead of the November expiry this week, exacerbating market volatility. U.S. President Donald Trump expressed optimism earlier about a possible agreement between the world's two largest oil-consuming nations. However, this development had little positive impact on the market, as tanker capacity reached all-time highs, representing one of the most tangible signs of oversupply to date. With OPEC and its allies ramping up production, crude oil futures have dropped over 20% from summer highs, and major institutions forecast that ample supply will continue into next year. Nevertheless, WTI's 9-day Relative Strength Index (RSI) earlier entered an oversold territory for the first time since May, suggesting that the recent decline in oil prices may have been too rapid, potentially indicating a market reversal. “Crude oil futures remain defensive, with the market broadly believing that the oversupply is imminent,” said Dennis Kissler, Senior Vice President of BOK Financial Trading. He also noted that WTI's support level is around $56.15 per barrel, and if it closes below $55, it could decline further. Other key market indicators are also weakening. The spread between WTI December and January contracts has turned into a contango structure—a bearish signal—where near-month contract prices are below those of later months for the first time since May. WTI's November futures, expiring on Tuesday, fell by 2 cents, settling at $57.52 per barrel; Brent December futures settled down 28 cents at $61.01 per barrel.

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