FX.co ★ Oil Market Faces Worsening Supply Glut

Brent crude futures declined to approximately $62.5 per barrel on Thursday, extending a 4% drop to reach a three-week low, driven by escalating concerns over a potential oversupply in the market. The International Energy Agency (IEA) expressed that the oil market is experiencing increasing imbalance, with global inventories on the rise and a larger surplus anticipated. The agency increased both its demand and supply predictions, now expecting demand to rise by 788,000 barrels per day this year and 770,000 barrels next year. However, supply is projected to grow at a faster pace, with increases of 3.1 million barrels per day this year and 2.5 million barrels per day next year. This situation suggests surpluses of 2.4 million barrels per day in the current year and 4 million barrels per day in the following year. Additionally, the IEA has revised its stance on the peak oil demand, foreseeing consumption growth continuing through 2050. Meanwhile, OPEC has maintained its demand projections but noted that global supply exceeded demand by 500,000 barrels per day in the third quarter. Further pressure on prices came from increased US output forecasts and data from the American Petroleum Institute (API) reflecting another rise in inventories, which has intensified fears of a global oil surplus, despite geopolitical tensions and sanctions on Russian producers.