On November 12, crude oil futures plummeted to a three-week low, influenced by less optimistic economic forecasts from both the U.S. Energy Information Administration (EIA) and the Organization of the Petroleum Exporting Countries (OPEC). The NYMEX December West Texas Intermediate (WTI) contract closed down by $2.55, settling at $58.49 per barrel, while ICE January Brent took a similar hit, decreasing by $2.45 to end at $62.71 per barrel.
The decline marks the first time since late October that the front-month NYMEX WTI and ICE Brent settled at such low levels, prompting analysts to reevaluate their market outlook. Comments from the EIA pointed to a belief in prolonged decreases in crude prices. "We project that inventory builds will moderate later in 2026 due to a combination of higher global oil demand and slightly lower oil production growth, both in response to lower oil prices," said an EIA statement from their latest Short-Term Energy Outlook.
Crucially, the EIA has adjusted its price projections, forecasting an average oil price of $55 per barrel for 2026, a revision up by 5.3% from their previous estimates. This update is partially attributed to changed assumptions regarding inventory builds in China and ongoing sanctions against Russia. Furthermore, the outlook remains bleak for 2025, with expectations for an average price drop of $14 per barrel.
As a reaction to this shift, the six-month NYMEX WTI contract settled at an 11-cent premium over the front month, marking a transition into contango for the first time since October 22, and representing the widest spread since January 2024. Additionally, December gasoline futures (RBOB) decreased by 5.66 cents, settling at $1.9554 per gallon, while ultra-low sulfur diesel (ULSD) dropped by 9.41 cents to $2.4816 per gallon.
OPEC's recent monthly oil market report highlighted adjustments as well, particularly regarding the organization's production predictions. The forecast for the required 'call' on OPEC+ crude was revised down by 100,000 barrels per day for both 2025 and 2026. This adjustment came alongside a 100,000 b/d increase in their estimate for non-OPEC+ production growth for 2025, now projected at 900,000 b/d, based on newly received historical data.
“OPEC also expects production growth in 2026 to remain steady at 600,000 b/d,” noted the report. This re-evaluation indicates how external factors, such as market demand dynamics and production levels, are continuing to shape the oil market landscape.
Overall, OPEC+ saw its crude production increase by 120,000 b/d month-over-month in October, totaling 43.09 million b/d, as reported in the latest Platts OPEC+ survey by S&P Global Commodity Insights.
With these revisions from both the EIA and OPEC, market participants are left to ponder the implications of anticipated rising supply amidst dwindling prices, raising questions regarding the future trajectory of oil markets as we head into 2026. This developing situation highlights the volatility and interconnectedness of global oil supply and demand, underscoring the need for stakeholders to stay agile during challenging market conditions.