Oil slides to the lowest level since June
West Texas Intermediate was on track for its largest weekly loss since June before paring declines on Friday. The November contract settled at $60.88/Bbl, down $4.84 from last Friday’s settle of $65.72/Bbl.
Attention now shifts to the OPEC+ meeting on October 5. Earlier this week, one delegate suggested the group might accelerate its latest round of supply hikes—about 500 MBbl/d over the next three months through January. Other members quickly refuted that claim. OPEC+ has already pledged to restore the 2.5 MMBbl/d previously withheld through September and, as of last month, committed to releasing barrels from its 1.66 MMBbl/d tranche of held-back supply.
As Bloomberg noted, OPEC+ has likely taken comfort in the market’s response to its supply policy. Oil curve structure has remained in backwardation, but nearby time spreads are softening as the curve flattens ahead of this weekend’s meeting.
WTI retains backwardation through May 2026 as of October 3. However, forecasted balances show inventories rising this quarter and into 2026, a development that could push the curve into contango and pressure the front end. Similar concerns were voiced at the Argus Global Markets conference this week, where Martijn Rats noted: “We are all waiting for these ballooning global stocks to finally show up in Atlantic Basin crude. At some point they’re going to build, and then we’re going to go to contango.”
AEGIS recommends utilizing swaps as we maintain a bearish view and swaps provide the strongest protection. For longer-dated hedges such as Cal 2027 and Cal 2028, costless collars may be considered. In fact, the longer term could be bullish: projected non-OPEC+ supply growth may be flat to negative by then, while OPEC+ spare capacity could be minimal.