{"id":98445,"date":"2025-10-24T10:55:13","date_gmt":"2025-10-24T10:55:13","guid":{"rendered":"https:\/\/www.newsbeep.com\/nz\/98445\/"},"modified":"2025-10-24T10:55:13","modified_gmt":"2025-10-24T10:55:13","slug":"there-are-signs-the-supply-glut-is-now-hitting-the-market","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/nz\/98445\/","title":{"rendered":"There Are Signs the Supply Glut Is Now Hitting the Market"},"content":{"rendered":"

There are signs that the long-anticipated supply glut is now hitting the market, with the six-month and 12-month term spreads flipping into contango.<\/p>\n

That\u2019s what analysts at BMI said in a BMI report sent to Rigzone by the Fitch Group on Friday, adding that, \u201csentiment is souring, with the ratio of long to short positions held by managed money in Brent crude falling to 1.8 as of mid-October, its lowest level since April, in the wake of the reciprocal tariff announcements\u201d.<\/p>\n

\u201cAbsent major export disruptions in Russia, prices will remain under pressure over Q4 2025 and into early 2026, amid looser supply-demand fundamentals,\u201d the analysts added.<\/p>\n

\u201cHowever, a pause in the OPEC+ supply hikes – and scope for limited market intervention in response to extreme price weakness – should help to put a floor under Brent,\u201d they continued.<\/p>\n

The BMI analysts noted in the report that, from the second half of 2026, they \u201cexpect stronger demand growth, slower supply growth, and healthier market sentiment will foster a recovery in prices\u201d.<\/p>\n

\u201cThat said, this hinges on several key assumptions, including near-term restraint by OPEC+, a meaningful slowdown in the U.S. shale patch, robust import demand in Mainland China, and an improved global macroeconomic backdrop heading into 2027,\u201d the analysts said.<\/p>\n

The BMI analysts stated in the report that oil prices have come under pressure this month, pointing out that Brent fell to a five-month low of $61 per barrel on October 20, \u201cbefore partially rebounding to above $64 per barrel at the time of writing on October 23\u201d.<\/p>\n

\u201cThe recent jump was triggered by the announcement that U.S. President Donald Trump was imposing Ukraine-related sanctions on Russia, including sanctions on Lukoil and Rosneft<\/a>, two major exporters of Russian oil,\u201d the analysts added.<\/p>\n

In the report, the BMI analysts highlighted that their three to six month outlook for oil was \u201cneutral\u201d and that their 12 to 24 month outlook was \u201cneutral-bullish\u201d. The report pointed out that BMI expects the front month Brent crude price to average $68 per barrel this year and $67 per barrel in 2026.<\/p>\n

In a report sent to Rigzone by the Skandinaviska Enskilda Banken AB\u00a0(SEB) team on Friday, SEB Chief Commodities Analyst Bjarne Schieldrop\u00a0pointed out that Brent jumped to an intraday high of $66.36 per barrel yesterday after having touched an intraday low of $60.07 per barrel on Monday.<\/p>\n

Schieldrop noted in that report that Brent was \u201cfalling back 0.4 percent this morning to $65.8 per barrel\u201d.<\/p>\n

In a market analysis sent to Rigzone today, Michael Brown,\u00a0Senior Research Strategist at Pepperstone, noted that crude benchmarks \u201cwere the big mover yesterday, with both Brent and WTI barreling higher, adding a slick five percent apiece; the catalyst here being the U.S. announcement of sanctions on Russia\u2019s largest oil refiners\u201d.<\/p>\n

\u201cWhile I\u2019m always tempted to fade any geopolitically induced market moves, it increasingly looks as if crude has put in a bottom, especially with the U.S. sitting on the bid as the SPR [Strategic Petroleum Reserve] is refilled,\u201d he added.<\/p>\n

In a statement posted on its website on October 21, the U.S. Department of Energy (DOE) announced a new solicitation to purchase one million barrels of crude oil for delivery to the SPR at the Bryan Mound site.<\/p>\n

The statement said the solicitation is in accordance with the Working Families Tax Cut which President Trump signed into law earlier this year. The legislation appropriated $171 million to begin refilling the SPR, the statement highlighted.<\/p>\n

\u201cThanks to the President and Congress, we are able to begin the process of refilling the SPR,\u201d Energy Secretary Chris Wright said in the statement.<\/p>\n

\u201cWhile this process won\u2019t be complete overnight, these actions are an important step in strengthening our energy security,\u201d he added.<\/p>\n

To contact the author, email\u00a0andreas.exarheas@rigzone.com<\/a><\/p>\n

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