Oil Extends Retreat After 4% Tumble on Signs Glut Has Arrived

The new diesel hydrotreatment unit, designed to reduce sulfur parts per million in fuel, at the Ecopetrol Barrancabermeja refinery in Barrancabermeja, Santander department, Colombia, on Tuesday, Oct. 7, 2025. As Colombias oil and gas reserves dwindle, the Andean nation is spurning an aggressive green energy drive ushered in by President Gustavo Petro and reembracing fossil fuels. Photographer: Esteban Vanegas/Bloomberg Photo by Esteban Vanegas /Bloomberg

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(Bloomberg) — Oil extended a decline after slumping on Wednesday on a flurry of signs that a long-awaited surplus has finally arrived.

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Global benchmark Brent fell toward $62 a barrel after losing almost 4% in the previous session, while West Texas Intermediate was near $58. Producer group OPEC — which has been restoring capacity this year — said in its latest market snapshot that global supplies ran ahead of demand in the third quarter.

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Elsewhere, a key market indicator — WTI’s prompt spread — flipped briefly into contango, a pricing pattern that signals ample near-term supplies, and the US Energy Information Administration raised its US production forecast for next year. More bearish signals may come later Thursday when the Paris-based International Energy Agency issues its monthly report.

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Crude has retreated this year on widespread expectations for a glut, with the IEA already predicting that there will be a record surplus in 2026. The slump has been driven by rising supplies from OPEC and its allies including Russia, as well as production increases from drillers outside the alliance.

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“There’s a lot of oil supply that’s coming back from the OPEC+ countries,” Chevron Corp. Chief Executive Officer Mike Wirth told Bloomberg Television. “There’s a period of time when it would appear we’re going to see more supply coming into the market than demand will be able to absorb.” 

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Lower crude prices — if sustained — stand to bring down products such as gasoline, reducing inflationary pressures in a plus for central bankers such as the Federal Reserve, as well as for consumers. That may also stand as a win for US President Donald Trump, who has championed cheaper energy.

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In recent weeks, the Trump administration has also moved to raise the pressure on Russia to end the war in Ukraine, in part by sanctioning Rosneft PJSC and Lukoil PJSC. That, coupled with Ukraine attacks against Moscow’s energy infrastructure, has helped to support product prices.

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“It’s a seesaw battle between Russia risk premium and ample supply,” said Vandana Hari, founder of Singapore-based analysis firm Vanda Insights. “Sentiment may shift again, as the market continues to calibrate the disruption from sanctions. Workarounds appear tougher this time around.”

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