Oil extended declines as investors weighed signs of a swelling surplus ahead of trade talks between the US and China later this week.
Brent dropped below $61 a barrel after falling 0.5% on Monday, while West Texas Intermediate was near $57. The amount of crude on tankers at sea has risen to a record high as producers keep adding barrels, according to data from Vortexa. The build-up of supply comes as demand growth slows.
The International Energy Agency is projecting a record oil surplus next year as the OPEC+ alliance and producers from outside of the group ramp up output. Futures are heading for a third monthly loss, and time spreads for both global benchmarks are starting to signal ample supply.
“We've got supply growth running three times faster than demand growth,” Bob McNally, founder and president of Rapidan Energy Group, said in an interview on Bloomberg Television. “Near-term we have a glut.”
A total of 1.24 billion barrels of crude and condensate — a light form of oil — was moving on tankers in the week to Oct. 17, according to analytics firm Vortexa. That's up from a revised 1.22 billion barrels a week earlier.
Meanwhile, negotiators from the US and China are expected to discuss trade at a meeting in Malaysia this week, ahead of a meeting between President Donald Trump and his Chinese counterpart Xi Jinping later this month.
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