DTN Oil Update
Oil Back at 5-Month Low as IEA Forecasts Record Oil Glut
VIENNA (DTN) -- Oil futures plumbed fresh five-month lows after the International Energy Agency raised its oversupply forecast for next year to an unprecedented 4 million bpd, after foreseeing production rapidly outpacing demand growth.
In Tuesday, Oct. 14, morning trade, NYMEX-traded WTI crude for November delivery fell $1.43 to $58.06 bbl, after dropping to $57.68 earlier for its lowest level since May.
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ICE Brent for December delivery dropped $1.44 to $61.88 bbl, after a five-month low at $61.50.
Among oil products, November RBOB gasoline futures retreated $0.0225 to $1.8213 gallon, while front-month ULSD futures slumped $0.0516 to $2.1981 gallon.
The U.S. Dollar Index edged up 0.085 points to 99.115 against a basket of foreign currencies.
IEA's latest oil market report contained a 300,000-bpd upward revision to 2026 supply growth, now estimated at 2.4 million bpd, while leaving its 2026 demand growth estimate unchanged. The revision was based on the pace of recent OPEC production hikes, which the Paris-based energy watchdog is expecting to continue well into 2026.
In fact, IEA estimated global production in September to have reached a record high 108 million bpd, up 760,000 bpd month-on-month and a staggering 5.6 million bpd year-on-year, with OPEC+ accounting for 3.1 million bpd of that increase.
The supply surge implied that global oil inventories have likely expanded for an eighth consecutive month in September, after observed global inventories reached a four-year high 7.909 billion bbl.
The agency's latest report added to signs of an already well-supplied market, with WTI time spreads beginning February 2026 showing a contango situation, where nearby futures trade at a discount to longer-dated contracts that imply near-term oversupply.
Backwardation in oil futures -- the opposite of contango -- has been easing for months. Brent's six-month time spread has dropped to $0.14 bbl, its lowest since May. The 12-month spread, meanwhile, flipped into contango the first time since June.