Oil Markets Continue to Decline Amid Expectations of Record Supply Surplus
Oil prices continued to decline for the second consecutive session on Wednesday, affected by pessimistic reports from the International Energy Agency regarding the likelihood of a significant surplus in supply next year, amid renewed trade tensions between the United States and China.
By mid-session today, Brent crude futures fell by 0.3% to record a price of $62.17 per barrel. Meanwhile, West Texas Intermediate crude futures dropped by 0.2% to $58.53 per barrel, closing both crude types at their lowest levels in five months, after recording the same low levels in the closing session on Tuesday.
This downward pressure was primarily driven by the report released by the International Energy Agency on Tuesday, which raised its estimates for the expected surplus in the global oil market next year. The report indicated that this surplus could reach about four million barrels per day, a level higher than previous expectations, due to increased production from the "OPEC+" alliance and its competitors, alongside continued weak global demand.
In this context, renewed trade tensions between the world's two largest economic powers add further uncertainty to demand forecasts. Last week saw an escalation after China tightened restrictions on the export of rare earth elements, while U.S. President Donald Trump threatened to impose tariffs of up to 100% on Chinese goods, in addition to tightening restrictions on software exports starting November 1.
Commenting on these developments, analyst Yang An from "Haitong Futures" told Reuters: "Aside from the trade relations between the United States and China and the developments in their talks, the fundamental driver of oil prices currently is the size of the surplus in supply, which is clearly reflected in the changes in global inventories."
