DTN Oil Update
Oil Slides as OPEC Flags Saudi Supply Rebound, Weak Demand
VIENNA (DTN) -- Oil futures retreated Tuesday morning after a three-day rally that came on the back of escalating fighting in the Middle East. An OPEC report showing a larger-than-expected production rebound last month weighed on sentiment, as did the group's latest downward revision to 2026 oil demand growth estimates.
By 9:30 a.m. EDT, ICE Brent for December delivery was down $1.52 to trade near $105.13 bbl, and NYMEX WTI for November delivery fell $0.97 to $92.77 bbl.
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Downstream, NYMEX RBOB for November delivery retreated $0.0734 to $3.2183 gallon, while front-month ULSD futures bucked the trend, advancing $0.0770 to $4.8002 gallon.
The U.S. Dollar Index softened by 0.375 points to 102.0 against a basket of foreign currencies.
According to the producer group's monthly oil market report published this morning, combined output from OPEC members, their partners, and the UAE, in September soared by 900,000 bpd month-on-month to 39.07 million bpd, the most since the beginning of the war in late February. The increase came as Iraqi crude production rebounded by nearly 400,000 bpd to more than 93% of pre-war levels, and as Saudi Arabian output recovered from a self-reported all-time low of 6.24 million bpd in August. OPEC+ crude oil production was still 3.69 million bpd, or 9%, below the pace in February, given that Iranian and Saudi output were lagging ante bellum levels by 1 and 2 million bpd, respectively.
While most major forecasters see oil demand shrinking this year, OPEC has held on to, albeit increasingly tempered, growth expectations throughout the crisis. The fact that notoriously bullish OPEC analysts have in their most recent outlook slashed their 2026 oil demand growth forecast in half, now calling for a measly 180,000 bpd year-on-year increase in consumption, was the latest in a series of growing signs pointing to demand weakness.
In the U.S., offshore operations have started to return from last week's brief Hurricane-induced shutdown that affected around 75% of output. As of Monday, some 30% of evacuated rigs were still idle. To make up for lost supply, the federal government last week authorized the release of up to 4 million bbl of crude oil from the Strategic Petroleum Reserve.
Latest Energy Information Administration (EIA) data showed that 283 million bbl were left in emergency stockpiles as of early October, the least since 1982. Market observers will be on the lookout for the American Petroleum Institute's weekly inventory estimates on tap later today, followed by EIA's weekly petroleum status report scheduled for release Wednesday.
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