Oil Holds Steady as Supply Glut Clouds Outlook

Highlights:

• Brent crude traded just below US $61 a barrel, while West Texas Intermediate hovered near US $57 at the time of writing, as investors assessed signs of a growing oil surplus.
• Global crude volumes on tankers have reached a record high, reflecting continued production growth amid slowing demand.
• Oil is heading for its third straight monthly decline, with analysts warning that Brent could slip into the US $50 range next year if oversupply persists.

Oversupply Concerns Weigh on Prices

Oil prices remained broadly flat on Tuesday as investors digested signs of a growing surplus in the global market. At the time of writing, Brent crude was trading slightly below US $61 per barrel, while West Texas Intermediate remained around US $57. The pressure comes as the volume of crude aboard tankers hit a record high, a clear indication that supply is outpacing demand.

Supply Build-Up Amid Fading Demand Growth

Data from analytics firm Vortexa show more than 1.24 billion barrels of crude and condensate in transit on tankers during the week to October 17, rising from 1.22 billion barrels a week earlier. The surge is largely attributed to increased output from both OPEC+ nations and non-OPEC producers, while demand growth continues to slow—raising fears that the market is heading toward a sizable glut.

What This Means for the Market

With oil prices on track for a third consecutive monthly decline, traders are closely watching forward time spreads for signals of oversupply. Some analysts warn that if current trends persist, Brent crude could slip into the US $50 per barrel range next year. The timing of upcoming trade discussions between the US and China could offer some upside relief, but the underlying fundamentals remain challenged.

Near-Term Outlook

It’s a delicate balance for oil markets: production remains robust while demand faces headwinds. Unless consumption accelerates or production growth is curtailed, prices are likely to remain under pressure. Investors are also monitoring geopolitical developments and data flows for any meaningful shift in the supply-demand equation.

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