Oil prices jumped have risen from recent lows as traders reduce their bearish OPEC bets.
USOIL – Daily Chart
USOIL prices touched lows near the $56.00 level and is now moving toward the $60.00 level. There is some resistance at $61.50 on the daily chart.
Global oil prices indicate that the market is moving into a period of oversupply, but the significant divergence in forecasts for OPEC’s production may lead to a near-term low.
Futures contracts for February delivery have started trading at a discount to future prices, which is known as a contango structure. That highlights the medium-term bearish attitude toward supply and demand in the current climate.
The International Energy Agency has been warning of an oil glut for 2025 and 2026, pointing to the ramp-up in production around the world, particularly from OPEC+ members. In the group’s most recent report, the IEA forecast a surplus of 2.35 million barrels per day in 2025 and 4 million bpd, almost 4% of global demand, in 2026.
Investors have been less quick to price in that expected glut, which was partly because OPEC analysts were more balanced in their estimates for supply and demand. That was driven by the fact that developed nations’ inventories were at relatively low levels, while demand was holding up despite the U.S. tariff trade wars.
But that dynamic started to shift in August, with global inventories, including supply from OECD countries and China, touching a four-year high with gains of 225 million barrels over the year, according to the IEA.
Just as the market is being told there is a glut, oil is looking to mark a low, and there are risks out there, such as the U.S. surrounding Venezuela, that could spark a gold rally.
