The International Energy Agency (IEA) predicts that next year there will be a global surplus of over 4 million barrels of oil per day. This happens because oil supply is expected to rise by 2.5 million barrels per day, while demand will only grow by 770,000 barrels per day. OPEC anticipates an oversupply in the oil market during the first half of 2026 but thinks a shortage could happen in the second half, which might balance things out. OPEC also expects production from OPEC+ to stay steady, meaning there won’t be room for increased production without creating an oversupply.

US Energy Information Administration Forecast

The US Energy Information Administration (EIA) shares a similar outlook, projecting a surplus of 2.2 million barrels per day next year. Because of this, Brent crude oil prices might drop to an average of $55 per barrel. The EIA also estimates that US crude production will hit 13.86 million barrels per day this month but will decline afterward. Despite this decline, they do expect a slight rise in US production next year. In September, global oil stocks reached their highest level in four years, mainly due to storage in oil tankers. Inventories in OECD countries also returned to their five-year average. With many experts expecting a significant oversupply in 2026, it looks like oil prices are likely to fall. Brent crude oil is currently finding it hard to stay above the low $60s. This indicates that traders should see any temporary price strength as a chance to sell.

Opportunities In The Current Market Environment

We see this market as a good opportunity to buy put options or set up bear put spreads on crude futures. With implied volatility higher due to uncertainty, these spreads can help manage entry costs while preparing for a price drop toward the EIA’s forecast of an average of $55 next year. The market seems vulnerable, especially as we approach the winter months when gasoline demand is typically lower. The biggest event coming up is the OPEC+ meeting on December 5th. Their own report points out that they can’t increase production without creating a surplus, so the market will be very attentive to any talks about extending or deepening production cuts. We remember how sharply the market reacted to their surprise cuts back in 2023, and a similar action could quickly disrupt bearish trades. Fundamental data also supports a market downturn. Global oil inventories already reached a four-year high in September 2025. In addition, data from Baker Hughes shows that the US oil rig count is around 615 rigs, suggesting that production is leveling off after reaching a record high this month. The mix of high stockpiles and slowing growth in non-OPEC production strengthens the oversupply argument. On the demand side, expectations remain low, as forecasts indicate slow growth for oil consumption next year. For example, China’s October manufacturing PMI was at 49.8, marking the second consecutive month of contraction and dimming hopes for a strong recovery in consumption. This weak economic performance from the world’s largest oil importer provides little indication of a sudden rise in oil demand. Create your live VT Markets account and start trading now.

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