WTI Drops to Near $62.00 on Oversupply Concerns and Bearish EIA Report

WTI Drops to Near $62.00 on Oversupply Concerns and Bearish EIA Report

West Texas Intermediate (WTI) crude oil prices dropped to around $62.15 during the early Asian session on Thursday, marking a near two-month low. This decline follows a bearish weekly report from the Energy Information Administration (EIA) and concerns about an oil oversupply, which have weighed heavily on the market sentiment.

Unexpected Rise in US Crude Oil Inventories

The EIA's latest inventory report revealed an unexpected increase in US crude oil inventories, signaling weak demand in the market. For the week ending August 8, US crude oil inventories rose by 3.036 million barrels, a stark contrast to the anticipated drop of 800,000 barrels. The previous week had seen a decline of 3.029 million barrels, making this week’s figure a significant surprise.

This unexpected build-up in inventories has added to the bearish sentiment surrounding oil prices, as it indicates that demand for crude oil remains subdued, further pressuring WTI prices.

IEA Forecasts Oil Surplus and Weak Demand

In addition to the inventory data, the International Energy Agency (IEA) also weighed in with a bearish forecast for the global oil market. The IEA warned that global oil supply is set to exceed demand, with a forecasted surplus of 2.96 million barrels per day (bpd) by 2026. This outlook is based on growing supply from both OPEC+ and non-OPEC+ producers, combined with sluggish global demand growth.

The combination of these bearish reports has left traders concerned about oversupply in the market for the remainder of the year, pushing WTI prices lower.

Market Focus Shifts to Trump-Putin Meeting

Looking ahead, traders will be closely monitoring the upcoming Trump-Putin meeting later today. Any developments in global geopolitics or changes in oil-related policies could provide further clues as to the direction of oil prices. Market participants are hopeful that the meeting could bring new insights into potential shifts in global oil production or trade relations, which could influence the supply-demand balance.

In the meantime, the market continues to digest the EIA's inventory data and IEA’s surplus forecast, which are putting continued downward pressure on WTI prices.