Oil Prices Drop on Oversupply Outlook, Tariff Tensions


   
Barani Krishnan
DTN Refined Fuels Market Reporter

   SECAUCUS, NJ (DTN) -- Oil futures fell back on Tuesday (10/14) after a 
one-day reprieve, driven by concerns over weakening demand amid a record 
oversupply forecast by the International Energy Agency for next year and 
simmering U.S.-China trade tensions.

   The IEA, in its monthly oil report, raised its oversupply forecast for 2026 
to an unprecedented 4 million bpd as it expected growth in production to 
rapidly outpace demand.

   Separately, U.S. Trade Representative Jamieson Greer reignited concerns over 
a possible 100% tariff on Chinese goods, citing Beijing's changes in rare earth 
exports that could hit U.S. industry. Until Monday (10/13), U.S. President 
Donald Trump had minimized the likelihood of imposing new tariffs on China.

   Tariffs of 15% to 50% placed on most U.S. trading partners are already a 
concern to the Federal Reserve, which is set to make its next interest rate 
decision on October 29 following a quarter percentage-point cut in September. 
The Fed's chairman Jerome Powell said in a speech on Tuesday that tariffs were 
complicating the near-term reading on inflation.

   The NYMEX WTI crude futures contract for November delivery settled down 
$0.79 at $58.70 bbl, after an earlier low at $57.68 bbl, ICE Brent for December 
delivery fell $0.86 to $62.46 bbl, after an earlier tumble to $61.50 bbl.

   Among oil products, November RBOB gasoline futures retreated $0.0140 to 
$1.8298 gallon, while front-month ULSD futures slumped $0.0505 to $2.1992 
gallon.

   The U.S. dollar index edged up 0.240 points to 98.79 against a basket of 
foreign currencies.

   Beyond prompt pricing, spread for oil futures on NYMEX and ICE are also 
reflecting a well-supplied market.

   WTI for delivery in February 2026 and beyond are in contango, a situation 
where nearby futures trade at a discount to longer-dated contracts.

   Brent's 12-month spread was also in contango for the first time since June, 
based on DTN data.

   Oil industry executives from Vitol, Trafigura and Gunvor told a forum in 
London they expected the surplus in supply to shrink over time although Brent 
could trade in a weaker range of $62-$66.50 bbl over the next year.

   Their comments came as the EIA upgraded its 2026 supply growth forecast by 
300,000-bpd to 2.4 million bpd while leaving demand growth estimates unchanged 
at 700,000 bpd.




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