Oil prices retreated Tuesday as investors weighed OPEC+’s decision to pausing further output increases through the first quarter of next year amid concerns over a supply glut.
At 05:05 ET (10:05 GMT), Brent Oil Futures expiring in January fell 1.6% to $63.88 per barrel and West Texas Intermediate (WTI) crude futures dropped 1.7% to $60.02 per barrel.
Prices pressured by supply expectations The Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, announced ovefr the weekend a 137,000 barrels per day (bpd) production increase for December -- the last planned hike under its gradual unwinding of supply cuts.
The group, however, said it would pause output hikes through the first quarter of 2026, citing “uncertain demand trends” and “seasonal softness.”
"The market is expected to be in peak surplus through the first quarter of 2026, so a pause makes sense. However, given recent US sanctions on Russia, there is plenty of uncertainty as to the size of this surplus," ING analysts said in a recent note.
"If these sanctions disrupt Russian oil flows, it will eat into the expected surplus early next year, providing OPEC+ the opportunity to rethink its production policy in the early part of 2026," analysts added.
That said, EIA data shows that U.S. crude oil production managed to hit a record high of 13.79 million b/d in August, up 2.9% year-on-year, and less than 1% higher month-on-month, adding to expectations for a large surplus next year.
Soft demand fears grow On the demand side, U.S. economic data added to caution. The Institute for Supply Management said its manufacturing PMI fell to 48.7 in October, marking the eighth straight month of contraction.
Similar data in both China and Europe suggests that industrial demand for fuel may remain subdued heading into the winter months.
Traders are now awaiting the latest U.S. inventory figures from the American Petroleum Institute, expected later in the day, for further direction on market trends.
