Oil News: Supply Concerns Persist Despite OPEC+ Production Cuts

Prices Decline as Supply Surplus Concerns Persist

Light crude oil futures edged lower on Friday, retreating further from a critical resistance level at $69.11 and reaffirming a bearish trend. The market dipped below a swing bottom at $67.71 earlier in the session, signaling potential for additional downside. Technical indicators show the Fibonacci resistance at $69.11 and the 50-day moving average at $70.03 are keeping gains capped.

For the week, Brent crude futures were set to drop 2%, while U.S. West Texas Intermediate (WTI) futures were poised for a 0.5% decline. Analysts suggest further downside, with possible targets near $66.53 and $65.65 if bearish momentum continues.

At 12:11 GMT, Light Crude Oil futures are trading $67.59, down $0.71 or -1.04%.

OPEC+ Cut Extensions Fail to Buoy Prices

Despite OPEC+ extending its deep output cuts through 2026, concerns about an impending supply surplus weighed on market sentiment. The alliance, responsible for about half of the world’s oil production, delayed planned production increases from October 2024 to April 2025. This move reflects ongoing challenges from sluggish global demand, particularly from China, and rising supply from non-OPEC+ producers.

UBS analyst Giovanni Staunovo described the decision as a positive surprise, underscoring OPEC+’s commitment to stabilizing the market. However, the announcement has not alleviated concerns about oversupply, keeping prices under pressure.

Analysts Anticipate Growing Surpluses

Market sentiment was further dampened as banks reinforced surplus forecasts for 2025. Bank of America expects increasing oil surpluses to drive Brent crude prices to average $65 per barrel in 2025, even as demand growth rebounds to an estimated 1 million barrels per day (bpd) next year. HSBC revised its projection for the 2025 surplus downward to 0.2 million bpd from 0.5 million bpd, reflecting slightly improved market conditions but still pointing to oversupply risks.

Tight Range Reflects Market Pessimism

Brent crude has remained within a narrow trading range of $70 to $75 per barrel in recent weeks, constrained by weak demand signals and geopolitical risks in the Middle East. Analysts observed that short-term price movements may breach this range, but the medium-term outlook remains subdued.

“The market is stuck in a narrow range. Any upside developments are likely to be short-lived, as pessimism over medium-term fundamentals prevails,” said PVM analyst Tamas Varga.

Market Forecast: Bearish Outlook

Given persistent supply surplus concerns and weak demand growth, the crude oil market is expected to maintain a bearish outlook in the short term. Traders should monitor support levels at $66.53 and $65.65, as further declines could intensify selling pressure. While OPEC+ production cuts offer some stability, market sentiment points to sustained weakness ahead.

More Information in our Economic Calendar.