Oil Steadies Near Two-Month Low As IEA Warns Of Record Glut

Oil steadied near a two-month low after the International Energy Agency said the market is on track for record oversupply next year.

Brent traded near $66 a barrel after closing at its lowest since June 5 on Wednesday, while West Texas Intermediate was around $63. Global oil inventories will accumulate at a rate faster than the average buildup during the pandemic year of 2020, the IEA’s monthly report showed. 

Meanwhile, traders are monitoring the lead-up to Friday’s summit between the US and Russian presidents, given that it may result in an easing or tightening of Washington’s sanctions on the OPEC+ member. Donald Trump warned he would impose “very severe consequences” if Vladimir Putin didn’t agree to a ceasefire, following a call with European leaders. 

Oil has lost more than 10% this year after OPEC+ completed a reversal of output curbs started in 2023. The US government earlier this week bolstered its view for a surplus in 2026, while the IEA also raised its estimate for output outside of the Organization of the Petroleum Exporting Countries and its allies, especially in the Americas.

Meanwhile, US government data showed nationwide crude stockpiles rose about 3 million barrels last week to the highest level in two months. Holdings of distillates and supplies at the key storage hub in Cushing, Oklahoma, both increased. 

Brent’s prompt spread — the difference between its two nearest contracts — has narrowed in a sign that near-term conditions have become less tight. The widely watched metric was at 49 cents a barrel in backwardation, down from almost $1 a month ago.

Prices:

• Brent for October settlement gained 0.3% to $65.82 a barrel at 8:32 a.m. in Singapore.

• WTI for September delivery added 0.2% to $62.79 a barrel