- Crude oil futures remain subdued after bearish API data.
- US is set to build the strategic reserves that saw a big drawdown in previous administration.
- Russian oil exports and floating reserves add more to the oversupply narrative.
Crude oil futures continue bearish momentum on Thursday, global demand weakens, revealed by rising US inventories, and mounting oversupply concerns next year. WTI crude oil slipped near 0.20% to trade below mid-58.00, extending previous session losses as markets reacted to bearish supply data.
The latest API data revealed a 1.3 million barrel rise in the US crude inventories last week, reinforcing the perception of reduced demand, compared to the supply. Although stockpiles for distillate and gasoline fell, markets remained tilted to the downside amid swelling crude reserves. The fell below the key zone of $59-60, signaling increased bearish bets.
Moreover, OPEC’s monthly report also added to the pessimism, forecasting increased supply and reduced global demand throughout 2026, a major shift from previous expectations. The report highlighted higher US oil production and reduced demand in Asian economies, suggesting a significant surplus in the medium term.
Market structure now shows the shift as WTI futures curve flipped into contango. The long-dated contracts trade at a premium to near-term contracts. US crude exports reached higher levels since mid-2024 in October, highlighting a steady supply in the global markets. Meanwhile, Brent futures curve stays flat since March, revealing a dulled demand for immediate deliveries. The Brent traded at a discount this week for the first time in several months as revealed by the Brent-Dubai EFS, a gauge to find Brent’s premium over Middle Eastern grades.
According to Vandana Hari, founder of Vanda Insights, “The world is set to be in a slight surplus through this quarter and into the next. We may see continued contango in the forward curve, but not a deep one. It reflects a comfortable supply situation rather than a collapse in demand.”
The Energy Department of the US has moved to build the Strategic Petroleum Reserves (SPR), awarding contracts of 1 million barrels of crude oil to deliver at Bryan Mound site in late 2025 and early 2026. Chris Wright, Energy Secretary, noted, the decision aligns with Trump’s efforts to restore the energy security following record drawdowns during Biden administration. The SPR currently holds 400 million barrels, far below the capacity of 700 million barrels.
Adding further to the global oversupply concerns, Russian crude exports have surged modestly this month. According to Bloomberg, 35% of Russian oil vessels have yet to declare destinations, showing an effective floating storage. Crude oil remains vulnerable in the near term with rising US inventories, cautious OPEC and Russian exports.
