DTN Oil Update
Oil Prices Drop on Oversupply Outlook, Tariff Tensions
SECAUCUS, N.J. (DTN) -- Oil futures fell back on Tuesday, Oct. 14, after a one-day reprieve, driven by concerns over weakening demand amid a record oversupply forecast by the International Energy Agency for next year and simmering U.S.-China trade tensions.
The IEA, in its monthly oil report, raised its oversupply forecast for 2026 to an unprecedented 4 million bpd as it expected growth in production to rapidly outpace demand.
Separately, U.S. Trade Representative Jamieson Greer reignited concerns over a possible 100% tariff on Chinese goods, citing Beijing's changes in rare earth exports that could hit U.S. industry. Until Monday, Oct. 13, U.S. President Donald Trump had minimized the likelihood of imposing new tariffs on China.
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Tariffs of 15% to 50% placed on most U.S. trading partners are already a concern to the Federal Reserve, which is set to make its next interest rate decision on Oct. 29 following a quarter percentage-point cut in September.
The Fed's chairman Jerome Powell said in a speech on Tuesday that tariffs were complicating the near-term reading on inflation.
The NYMEX WTI crude futures contract for November delivery settled down $0.79 at $58.70 bbl, after an earlier low at $57.68 bbl, ICE Brent for December delivery fell $0.86 to $62.46 bbl, after an earlier tumble to $61.50 bbl.
Among oil products, November RBOB gasoline futures retreated $0.0140 to $1.8298 gallon, while front-month ULSD futures slumped $0.0505 to $2.1992 gallon.
The U.S. Dollar Index edged up 0.240 points to 98.79 against a basket of foreign currencies.
Beyond prompt pricing, spread for oil futures on NYMEX and ICE are also reflecting a well-supplied market.
WTI for delivery in February 2026 and beyond are in contango, a situation where nearby futures trade at a discount to longer-dated contracts.
Brent's 12-month spread was also in contango for the first time since June, based on DTN data.
Oil industry executives from Vitol, Trafigura and Gunvor told a forum in London they expected the surplus in supply to shrink over time although Brent could trade in a weaker range of $62-$66.50 bbl over the next year.
Their comments came as the EIA upgraded its 2026 supply growth forecast by 300,000-bpd to 2.4 million bpd while leaving demand growth estimates unchanged at 700,000 bpd.