West Texas Intermediate (WTI) Oil prices may be going down due to fears of too much supply. Last week, the US saw crude oil stocks increase by 5.202 million barrels, while the previous week had a decline of 6.858 million barrels. A steady rise in crude oil production from OPEC+ and countries like Russia is fueling worries about a global surplus. A commodities trader mentioned that this surplus might hit 2 million barrels per day next year, even with a small production increase planned by OPEC+ for December.

Global Oil Dynamics

Worldwide oil demand has gone up by 850,000 barrels per day this year, which is less than the earlier forecast of 900,000 barrels per day. In light of a well-supplied market, Saudi Arabia has lowered crude prices for buyers in Asia, setting December’s price at $1 above the Oman/Dubai average. WTI Oil is a major benchmark known for its low gravity and sulfur content, mainly traded in US dollars. Inventory numbers from the American Petroleum Institute (API) and the Energy Information Agency (EIA) affect WTI prices, signaling shifts in supply and demand. OPEC, a major player, adjusts production quotas that also influence global oil prices. Currently, WTI crude oil is around $59.50, and it seems to be trending downward. The latest report from the US EIA showed a significant inventory increase of 5.202 million barrels, which exceeded expectations and indicates a considerable supply surplus. This increase in US crude inventories has occurred in four out of the last five weeks, adding over 12 million barrels to storage since early October 2025. On the supply side, production from OPEC+ and other producers is on the rise, raising fears about oversupply. In October 2025, OPEC+ compliance with production targets fell to 95%, which suggests that member countries are beginning to compete for market share. This ties in with predictions of a possible 2 million barrel per day surplus next year.

Bearish Market Sentiment

Demand is also showing signs of weakness, as J.P. Morgan has lowered its forecast for global demand growth. Real-time data shows that US gasoline demand has dropped to a four-week moving average of 8.6 million barrels per day. This is a level we don’t usually see until the post-holiday season in January. Major oil producers are confirming this bearish perspective. Saudi Arabia’s sharp cuts to its official selling prices for Asian buyers signal that they are trying to attract customers in a saturated market. This price drop directly responds to increasing production from other OPEC+ countries and a decline in demand. Traders might find this situation better for strategies that profit from falling prices. For example, buying put options on WTI futures around the low $50s can limit risk while preparing for further declines. With current pressures, prices could move down to earlier support levels. A more cautious strategy could involve bear put spreads. This means buying a put option while selling a lower-strike put, which can lower initial costs. This method is good if we expect a gradual drop in prices rather than a sharp fall. While the outlook is downbeat, we should remain alert for sudden changes due to unexpected geopolitical events, a lesson learned from 2023’s volatility. Using options instead of shorting futures helps manage this risk. Key factors to monitor in the upcoming weeks are the weekly EIA inventory reports and any updates from OPEC+ about production plans for early 2026. Create your live VT Markets account and start trading now.

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