Oil steadies as market weighs excess supply and US-China trade tensions
- Brent crude futures were up 3 cents, or 0.1%, at $62.42 a barrel
LONDON: Oil prices steadied on Wednesday after closing at five-month lows in the previous session, as investors weighed the International Energy Agency’s prediction of a supply surplus in 2026 and trade tensions between the U.S. and China that could curtail demand.
Brent crude futures were up 3 cents, or 0.1%, at $62.42 a barrel by 1145 GMT, while U.S. West Texas Intermediate futures gained 11 cents, or 0.2%, to $58.81 a barrel.
The International Energy Agency said on Tuesday that the global oil market could face a surplus next year of up to 4 million barrels per day, more than it had previously forecast, as OPEC+ and other producers raise output and demand remains sluggish.
“The market is focusing on excess supply amid mixed demand signals. Ebbing geopolitical risks and escalating trade tensions are also adding further pressure on prices,” said Emril Jamil, a senior oil analyst at LSEG.
The trade dispute between the U.S. and China, the world’s two largest oil consumers, has reignited over the last week, with both countries imposing additional port fees on ships carrying cargo between them. That will raise trading costs and disrupt freight flows, likely lowering economic output.
“Oil prices are currently influenced by trade tensions and market risk sentiment,” said UBS analyst Giovanni Staunovo.
China last week announced it would increase rare earth export controls and U.S. President Donald Trump threatened to raise tariffs on Chinese goods to 100% and tighten software export curbs from November 1.
“Beyond U.S.-China trade relations and the progress of talks, the key for oil prices now is the degree of oversupply, reflected in changes in global inventories,” said Yang An, analyst at Haitong Futures.
For a view on U.S. demand, traders await weekly inventory data. U.S. crude oil stockpiles are expected to have risen last week, while gasoline and distillate inventories likely fell, a preliminary Reuters poll showed.
Six analysts polled by Reuters estimated on average that crude inventories rose by about 200,000 barrels in the week to October 10.
The weekly industry report from the American Petroleum Institute is expected at 4:30 p.m. EDT (2030 GMT) on Wednesday, and U.S. Energy Information Administration data at 10:30 a.m. EDT (1430 GMT) on Thursday.
Both reports are delayed by a day due to the Columbus Day/Indigenous Peoples’ Day holiday on Monday.
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