HOUSTON: Oil prices fell more than US$2 a barrel on Wednesday, weighed down by an Opec report saying global oil supply will match demand in 2026, marking a further shift from its earlier projections of a supply deficit.
Brent crude futures settled at US$62.71 a barrel, down US$2.45, or 3.76% after gaining 1.7% on Tuesday. US West Texas Intermediate crude finished at US$58.49 a barrel, down US$2.55, or 4.18%, after climbing 1.5% in the previous session.
The Organization of the Petroleum Exporting Countries noted that world oil supply would match demand next year due to the wider Opec+ group's production increases. Previously, it had projected a supply deficit in 2026.
"The prospect that the market is in balance is definitely what drove down prices," said Phil Flynn, senior analyst with Price Futures Group. "The market wants to believe it's balanced. I think the market took OPEC more seriously than IEA."
The International Energy Agency forecast in its annual World Energy Outlook that oil and gas demand could continue to grow until 2050. That was a departure from the IEA's previous expectation that global oil demand would peak this decade, as the international body moved away from a forecasting method based on climate pledges.
John Kilduff, partner at Again Capital, said the Opec outlook comes as some crude sellers cannot find buyers.
"There are cargoes going begging," Kilduff said. "The very front of the market is forming a new price curve. There's just a general sense of weakness in the US economy."
Analysts have previously highlighted that crude oversupply is curbing price gains. Opec+ agreed this month to a pause in increasing its output in the first quarter of next year, after having unwound its cuts to production since August this year.
The reopening of the US government could boost consumer confidence and economic activity, spurring demand for crude oil, IG analyst Tony Sycamore wrote in a note.
The US Republican-controlled House of Representatives is set to vote later on Wednesday on a bill, already signed off by the Senate, that would restore funding to government agencies through January 30.
The US Energy Information Administration will release its outlook on Thursday. — Reuters
