- Crude oil prices remain subdued on Thursday, led by increased US inventories despite a surge in imports to 11-week highs.
- Russia-Ukraine peace negotiations could add more to the supply concerns, keeping the prices under pressure in the medium term.
- The long-term projection of crude oil prices is below $50, as estimated by
Crude oil futures retreated on Thursday as markets weighed the growing probability of a ceasefire between Russia and Ukraine. This development could alter the global supply dynamics. The move reflects the market’s continued sensitivity to geopolitical shifts and more profound structural imbalances, highlighted by recent data.
The recent decline was partially triggered by the larger-than-expected build in US crude inventories, with EIA reporting a 2.8 million barrel increase to 426.9 million barrels last week. Imports climbed to 11-week highs, adding more to the downward pressure as supply exceeded demand.
Geopolitics remains a key driver in the near term. The hopes for progress in peace negotiations between Russia and Ukraine have raised concerns that Western sanctions could be eased, enabling more flow of Russian barrels into an already oversupplied market.
Market participants are also cautious ahead of the OPEC+ meeting; the members are expected to maintain the current oil production levels. Several producers in the group are increasing inputs silently, in an effort to capture the market share. According to ING analysts, the markets remain stuck between geopolitical breakthrough and December Fed rate cut expectations.
The long-term outlook is also increasingly bearish, as JPMorgan warns that the market is gradually heading toward a structural imbalance, with supply expected to grow three times the demand through 2026. Much of this supply is likely to come from non-OPEC+ producers. The bank forecasts that the WTI prices could dip below $50 in 2026 and near $30 by the end of 2027.
Moving ahead, prices are expected to remain in a tight range as the US Thanksgiving holidays approach. Meanwhile, there are no high-impact events scheduled for today or Friday, resulting in thin market activity.
