Oil Extends Losses to Three-Month Low on OPEC+ Supply Risk and Weak Macro Signals
WTI fell for a third straight session Friday, settling at its lowest level since late May as bearish fundamentals and macroeconomic data weighed on sentiment. The WTI prompt-month contract closed down $1.61 to $61.87/Bbl, capping a week dominated by oversupply fears.
Market focus is now on this Sunday’s OPEC+ meeting, where Saudi Arabia is urging the group to revive a 1.66 MMBbl/d tranche of curtailed production ahead of its scheduled return in 2026. Even the prospect of additional supply has weighed on sentiment, with traders worried that an early return of barrels could deepen an already fragile 4Q balance and pressure prices further.
US data added to the bearish tone. The Bureau of Labor Statistics reported only 22,000 jobs added in August, well below the 75,000 expected by analysts, signaling slowing economic momentum. The latest EIA report leaned bearish as well, showing a surprise build in commercial crude inventories of roughly 600 MBbls and a 2.1 MMBbl increase at Cushing, which pushed stocks at the hub to their highest level since early May.
Analysts’ outlooks reflected the market’s cautious mood. Goldman Sachs reiterated its forecast for Brent to fall to the low $50s/Bbl by late 2026 on the back of a projected 1.8 MMBbl/d global surplus driven by strong non-OPEC ex-US supply growth. UBS, meanwhile, expects Brent to remain rangebound in the $60–$70/Bbl area near term, supported by relatively tight balances, before gradually easing toward $62/Bbl by year-end as incremental supply comes online.
Overall, this week reinforced the bearish tilt we flagged in August. While geopolitical risks, from ongoing Ukrainian strikes on Russian refineries to renewed US naval activity off Venezuela, are offering near-term support, the prevailing setup points toward weaker conditions into 4Q and 2026. AEGIS maintains a bearish market outlook.
Crude Oil Factors
Geopolitical Risk Premium. (Bullish, Mostly Priced In) President Trump is pushing for a summit between Vladimir Putin and Volodymyr Zelensky following a series of high-level talks. Vandana Hari of Vanda Insights said crude “may be in for a holding pattern,” noting that while the path to a resolution has opened, it could take time. A peace deal could eventually ease restrictions on Russian crude exports, though Moscow has largely maintained flows throughout the conflict.
Speculator Positioning (Bearish, Priced In) The latest CFTC data show that as of August 12, money managers reduced their net long in CME’s flagship NYMEX WTI contract to just 48,865 contracts, the smallest bullish position since April 2009. Meanwhile, trades of WTI done on the ICE exchange show money managers holding a net short of about 53,000 contracts. When the two venues are combined, overall positioning in WTI has slipped into net short territory for the first time on record.
OPEC Market Share War. (Bearish, Surprise) Market focus is now on this Sunday’s OPEC+ meeting, where Saudi Arabia is urging the group to revive a 1.66 MMBbl/d tranche of curtailed production ahead of its scheduled return in 2026.
Oil/Product Inventories. (Bullish, Priced In) The latest EIA report leaned bearish as well, showing a surprise build in commercial crude inventories of roughly 600 MBbls and a 2.1 MMBbl increase at Cushing, which pushed stocks at the hub to their highest level since early May and pressured prompt-month spreads. Product demand indicators were softer, with total refined product supplied running nearly 2% below the same week last year, and exports slipped to about 3.55 MMBbl/d after several weeks of strength, signaling a weaker pull from international buyers.
OPEC+ Quotas. (Bullish, Priced In) On June 2, OPEC+ announced its extension of 3.66 MMBbl/d cuts through December 2025. Additionally, the 2.2 MMBbl/d voluntary cuts from eight member countries will continue into Q3 2024 but will start to be reversed in October at a rate of 0.18 MMBbl/d per month. OPEC+ members agreed on September 5 to delay a planned gradual 2.2 MMBbl/d supply hike by two months, shifting the start to December. The group will add 0.19 MMBbl/d in December and 0.21 MMBbl/d from January onwards, with an option to adjust or pause these hikes depending on market conditions. The cartel also reaffirmed its compensation cuts of 0.2 MMBbl/d per month through November 2025, as members such as Iraq, Russia, and Kazakhstan have struggled to meet their original production quotas.
AEGIS notes that the global crude market would quickly build inventories without OPEC's support in reducing supply.
OPEC Unwind. (Bearish, Mostly Priced in) OPEC+ announced a 547 MBbl/d production quota increase for the month of September, completing the reversal of the group’s November 2023 supply cuts a full year ahead of schedule. The move brings the total unwind to approximately 2.5 MMBbl/d, including the 300 MBbl/d hike allocated to the UAE.
China Demand. (Bearish, Priced In) According to analysts at ANZ, China’s crude buying, which had been a key source of demand support earlier this year, is expected to slow sharply in 4Q as inventories near 1.7 BBBbls and domestic demand softens. Analysts warn this slowdown could tip global balances into a more pronounced surplus by year-end.
USD (Bullish, Priced In) The US dollar index surged to multi-year highs toward the end of 2024. The dollar has since erased all post-election gains despite tariff fears being realized. Typically, a stronger dollar will have a negative impact on crude prices, while a weakening dollar will support prices.
Ukraine-Russia Resolution. (Bearish, Surprise) President Trump is pushing for a summit between Vladimir Putin and Volodymyr Zelensky following a series of high-level talks. Vandana Hari of Vanda Insights said crude “may be in for a holding pattern,” noting that while the path to a resolution has opened, it could take time. A peace deal could eventually ease restrictions on Russian crude exports, though Moscow has largely maintained flows throughout the conflict.
Trade War. (Bearish, Mostly Priced In) A federal appeals court ruled that most of President Trump’s global tariffs were illegal, saying he exceeded his authority. The decision adds uncertainty over the tariffs’ future, and while the Trump administration looks to appeal the decision the ruling is set to take effect on October 14 unless overturned, which has raised hopes for stronger economic growth.
Projected Oversupply. (Bearish, Mostly Surprise) According to the EIA, global liquid fuels production will rise by 2.0 million b/d in 2H25 compared with 1H25, with OPEC+ and non-OPEC producers each accounting for about half of the increase. Gains from the United States, Brazil, Norway, Canada, and Guyana will match those from the producer group. Global demand is expected to climb by 1.6 million b/d over the same period, resulting in inventory builds accelerating by nearly 0.5 million b/d.
Trump/Iran/Venezuela. (Bullish, Surprise) The US government has sent several ships off the coast of Venezuela prompting speculation that the Trump administration may be seeking to push Venezuelan President Nicolas Maduro from power. Tensions rose after the US sent fighter jets to the Carribean after two Venezuelan military aricraft flew over an American naval vessel in the area.
Russian Supply. (Bullish, Surprise) A team of European officials will visit the US Treasury on Monday to discuss economic penalties for Russia's onoging war with Ukraine and reluctance towards a ceasefire agreement.
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