Oil prices continued their decline after a sharp drop on Wednesday, as signs emerged that the long-anticipated supply surplus has materialized. WTI crude fell to $58 per barrel, following a more than 4% drop in the previous session—the steepest decline since June. Meanwhile, Brent crude traded below $63 per barrel.
OPEC reported that global supply exceeded demand in the third quarter, while the U.S. Energy Information Administration (EIA) raised its 2024 U.S. production forecast from 13.51 million barrels per day (bpd) to 13.58 million bpd. A key market indicator—the WTI crude spot price spread—briefly flipped into contango for the first time since February, signaling bearish sentiment due to ample near-term supply.
On Wednesday, oil prices tumbled by over $2 per barrel after OPEC revised its outlook, projecting that global oil supply would match demand by 2026—a shift from its earlier forecast of a supply deficit. Brent crude futures settled at $62.71 per barrel, down $2.45 (3.76%) from Tuesday’s 1.7% gain. WTI crude closed at $58.49 per barrel, shedding $2.55 (4.18%) after rising 1.5% the prior day.
OPEC attributed the supply-demand balance to increased output from the "OPEC+" alliance, contradicting its previous 2026 deficit projection. Phil Flynn, senior analyst at Price Futures Group, noted, "The prospect of market equilibrium is undoubtedly weighing on prices. The market wants to believe in balance, but OPEC’s influence seems to overshadow the IEA’s stance."
Earlier, the International Energy Agency (IEA) projected in its annual World Energy Outlook that oil and gas demand could grow until peaking around 2050—a departure from its prior forecast of peak demand by the end of this decade. The IEA reintroduced its "Current Policies Scenario" (CPS), under which oil consumption would rise 13% to 113 million bpd by 2050 from 2024 levels, contingent on slower electric vehicle adoption.
John Kilduff, partner at Again Capital, highlighted that OPEC’s revised outlook coincides with some crude sellers struggling to find buyers. "There’s a glut of unwanted cargoes. A new pricing curve is forming at the front end, and the U.S. economy shows broad weakness," he said. Analysts have previously noted that oversupply is capping oil price gains.
OPEC+ recently agreed to pause production increases in Q1 2024 after gradually unwinding cuts since August. IG analyst Tony Sycamore suggested that a U.S. government reopening could boost consumer confidence and economic activity, potentially lifting crude demand. The Republican-led House is set to vote on a funding bill to keep agencies operational until January 30, following Senate approval.