Oil prices rose on Tuesday after falling in the previous session, as traders tried to balance concerns about oversupply in global markets with escalating trade tensions between the United States and China, the world’s two largest oil consumers.
Brent crude futures climbed by 52 cents, or 0.84%, to $61.52 per barrel by 10:19 GMT. US West Texas Intermediate (WTI) crude for November delivery — due to expire on Tuesday — rose by 53 cents, or 0.9%, to $58.05, while the more active December contract gained 52 cents, or 0.9%, to $57.54 per barrel.
Prices had fallen on Monday to their lowest levels since early May amid worries about oversupply and slowing economic growth due to the latest escalation in the US–China trade conflict.
Ole Hansen, Head of Commodity Strategy at Saxo Bank, said: “Speculative bets on lower prices are likely to persist as long as Brent remains below the $65-per-barrel level.”
Structural Market Shift Reflects Supply Abundance
Both Brent and WTI have shifted into a market structure known as “contango,” where spot prices are lower than forward prices — typically a signal of plentiful supply and weak near-term demand.
In the physical market, sales of crude cargoes have declined, and discounts have widened across West African crude grades amid expectations of a significant surplus, said Yaniv Shah, Vice President of Oil Markets at Rystad Energy.
He added that oil prices have been under pressure since late last month as OPEC and its allies, including Russia (OPEC+), continued with plans to add more supply to the market. Analysts now expect a surplus this year and next, with the International Energy Agency (IEA) forecasting a global oversupply of nearly 4 million barrels per day by 2026.
Caution Over Oversupply Fears
Some analysts, however, believe concerns about a glut may be exaggerated for now.
Giovanni Staunovo, analyst at UBS, said in a research note that if the IEA’s forecast of a massive surplus were accurate, the oil futures curve would show a much steeper “super-contango” pattern — something not yet reflected in the market.
Meanwhile, a preliminary Reuters survey on Monday indicated that US crude inventories likely rose last week ahead of reports from the American Petroleum Institute (API) and the US Energy Information Administration (EIA).
During the week ending October 10, crude stockpiles rose more than expected, while gasoline and distillate inventories fell by a greater margin.
Olle Svalby, analyst at SEB Bank, said: “We’re not in an actual glut crisis. Distillate inventories have recently declined, and while geopolitical developments could spark short-term volatility, the overall trend remains bearish unless OPEC+ slows its output growth or macroeconomic conditions improve unexpectedly.”
Hopes Pinned on US–China Talks
Analysts noted that a broader trade agreement between the United States and China could provide support or at least a floor for prices.
Investors are now looking ahead to next week’s meeting between US President Donald Trump and Chinese President Xi Jinping in South Korea, though disputes over tariffs, technology, and market access remain unresolved.
