Oil prices fell for a second straight session on Tuesday, pressured by mounting concerns over excess supply and weakening demand linked to the ongoing trade dispute between the U.S. and China — the world’s two largest oil consumers.
Brent Crude futures slipped 30 cents, or 0.49%, to $60.71 a barrel as of 07:46 GMT. The expiring November contract for West Texas Intermediate (WTI) lost 29 cents, or 0.5%, to $57.23, while the more active December contract fell 31 cents, or 0.54%, to $56.71.
Oversupply fears push market into contango
Monday’s losses drove prices to their lowest levels since early May, as fears grew that escalating U.S.–China trade tensions could slow global economic growth and weigh on demand.
Both WTI and Brent are now trading in a contango structure — when near-term prices are lower than later-dated contracts — a pattern often seen when supply is ample and demand softens.
Supply concerns have intensified as the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, press on with plans to add more barrels to the market. Analysts now expect a crude surplus this year and next, with the International Energy Agency projecting an oversupply of nearly 4 million barrels per day in 2026.
“The continued weakening of Brent’s monthly spread structure indicates that the pressure from oversupply in the crude oil market is gradually materializing,” analysts from China’s Haitong Securities said in a note on Tuesday. “This will dampen market expectations and curb investors’ willingness to chase gains, limiting the potential for oil prices to rebound.”
Bearish sentiment builds
The bearish mood has prompted some banks to revise their price forecasts lower. Analysts at Goldman Sachs said Tuesday they expect Brent to fall to $52 per barrel by the fourth quarter of 2026, citing data pointing to a widening global glut.
The team attributed the past week’s price slump to signs that “the long-anticipated global surplus has started to show” in satellite tracking of global inventories as well as reports from the IEA and the U.S. Energy Information Administration.
Still, some upside potential remains if trade negotiations make progress. A meeting between Donald Trump and Xi Jinping next week in South Korea has raised hopes that any agreement could help stabilize prices, though disputes over tariffs, technology, and market access persist.
“As long as there’s no new bearish news, oil prices have a natural need to rebound from oversold levels. At present, if there are expectations of improvement in China–U.S. economic and trade talks, the probability of a rebound increases,” said Yang An, analyst at Haitong Securities.
Focus on U.S. inventories
Market participants are closely watching inventory data for further clues on supply-demand dynamics. A preliminary Reuters poll indicated that U.S. crude stockpiles likely rose last week, ahead of official reports from the American Petroleum Institute and the EIA later this week.
Leave a Reply