Oil Slides to Five Month Low as Oversupply Fears Trump Risk Appetite

Highlights:

• Oil prices slipped to a five-month low, with West Texas Intermediate (WTI) trading near US $58 a barrel at the time of writing, as concerns over a looming supply glut weighed on sentiment.
• OPEC+ producers are ramping up output faster than expected, heightening fears that global supply will outpace demand in the coming months.
• Despite a risk-on rally in equities driven by expectations of a U.S. Federal Reserve rate cut, oil markets remain under pressure amid growing inventory and demand concerns.

Prices Slip Despite Broader Market Strength

Oil prices drifted to their weakest levels in five months, as growing concerns over a global supply glut dampened the impact of broader risk-on enthusiasm. West Texas Intermediate (WTI) hovered near US $58 per barrel during trading, while Brent crude also came under pressure.

Supply Surge Outpaces Demand Outlook

The downward momentum was largely driven by signals that the OPEC+ group is ramping up production faster than many had anticipated, potentially flooding the market. Meanwhile, the International Energy Agency warned that supply could exceed demand by millions of barrels a day in 2025–2026, intensifying concerns about weakening fundamentals.

Risk Sentiment vs. Fundamentals

Although equities have found support from expectations of a U.S. rate cut later this month, oil has not benefited in kind. Market participants plagued by fears of oversupply have pulled back, even as risk assets strengthen. The narrowing of futures backwardation further reinforces the perception of weaker near-term demand.

Eyes on Data and Policy Moves

Traders are now watching upcoming U.S. inventory reports from the EIA and API, which could either reaffirm or shake current sentiment. Any renewed U.S.–China trade escalation or shifts in OPEC+ policy are likely to be key swing factors in the near term.

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