WTI drops near $58.00 on oversupply fears, eyes recovery post-shutdown
- WTI price lost more than 4% in the previous session on oversupply concerns.
- EIA raised its 2025 US Oil output forecast, while IEA softened its outlook on peak Oil demand.
- The Oil price may regain as sentiment improves after the US government shutdown ended.
West Texas Intermediate (WTI) Oil price remains subdued for the second consecutive day, trading around $58.20 during the European hours on Thursday. Crude Oil prices lost more than 4% in the previous session amid rising crude inventories in the United States (US), which reinforced concerns about the global supply glut.
The US Energy Information Administration (EIA) has raised its forecast for domestic Oil production next year, while the International Energy Agency (IEA) has softened its outlook on peak Oil demand, now expecting global consumption to continue rising through 2050. Investors are now awaiting the IEA’s monthly report later in the day for potential additional bearish signals.
The Organization of the Petroleum Exporting Countries and its allies, including Russia, collectively known as OPEC+, stated that global Oil supplies are expected to outpace demand in 2026, shifting from the group’s earlier forecast of a deficit. OPEC+ noted that supply already exceeded demand in the third quarter.
Reuters quoted Suvro Sarkar of DBS Bank as saying, “Recent price weakness appears to be driven by OPEC’s revision of the 2026 supply-demand balance in its monthly report, which indicates the group is now acknowledging the potential for a supply glut in 2026, a departure from its previously bullish outlook.”
The Oil price could recover its ground amid improving sentiment after US President Donald Trump signed the funding bill on Thursday, ending the record 43-day government shutdown in US history. The bill requires the Government to resume normal operations and call for direct payment for individuals to purchase healthcare.
The American Petroleum Institute (API) reported on Wednesday that US crude oil inventories rose by 1.3 million barrels in the week ending November 7, falling short of market expectations for a 1.7 million-barrel increase.
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
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