Oil prices erase wartime gains as swelling supply from OPEC+ and non-OPEC producers pressure benchmarks, with WTI and Brent holding near multi-month lows; analysts warn of further downside risk amid demand concerns.
USOIL declined to multi-month lows after swelling global supply erased the bulk of price gains seen during the Russia-Ukraine war. Rising non-OPEC production and expectations of OPEC+ unwinding cuts pressured the benchmark.
Swelling supply from producers outside OPEC and the alliance's own plans to raise output have shifted market focus away from geopolitical risk toward surplus fundamentals, pressuring prices.
WTI is testing support around $63-64 a barrel. A break below could target the $60 level.
OPEC+ could suspend planned output increases if prices fall too sharply, but the group's current signals suggest adherence to the unwinding plan.
Brent crude erased most of its wartime price gains as supply swells, with the global benchmark sliding below $70 a barrel. Rising output from non-OPEC nations and OPEC+ unwinding production cuts drove the selloff.
Brent prices are under pressure from swelling global supply as non-OPEC producers ramp up output and OPEC+ follows through on plans to unwind production cuts, offsetting any geopolitical risk premium.
Analysts see a test of the $65 a barrel level if supply continues to outstrip demand.
Lower oil prices generally weigh on energy sector earnings, potentially pressuring major oil company shares.
Oil benchmarks held losses on Wednesday, erasing most of the price gains sparked by supply fears during the Russia-Ukraine war. Swelling global supply, driven by rising non-OPEC production and expectations of OPEC+ unwinding output cuts, pushed WTI and Brent to multi-month lows. Analysts see further downside risk as demand concerns return to the forefront.
Prices are falling because swelling supply from OPEC+ and non-OPEC producers has overwhelmed demand, erasing the geopolitical risk premium that built up earlier in the war.
Analysts expect prices to remain under pressure as OPEC+ is likely to further unwind cuts, and global demand growth remains sluggish.
Lower crude prices are likely to translate to lower gasoline prices, offering relief to consumers and lowering headline inflation.