Oil News: Crude Oil Prices Climb as Analysts Downplay Severity of OPEC Supply Glut

Crude Oil Prices Firm as Oversupply Fears Ease, But Technical Pressure Remains

Light crude oil futures are trading slightly higher on Tuesday, consolidating within a narrow $1.50 range for a third consecutive session.

After finding support at $55.96 on Monday—just above a key long-term level at $55.27—prices have rebounded to $57.67. Despite this modest recovery, upside momentum remains limited, capped by significant technical resistance at the 50-day and 200-day moving averages.

At 12:46 GMT, Light Crude Oil Futures are trading $57.61, up $0.59 or +1.03%.

Oil Market Rebounds After Recent Lows

Oil prices are stabilizing following a steep decline on Monday, when they hit their lowest levels since early May. Traders reacted to concerns over a potential supply glut and deteriorating demand outlook due to the ongoing U.S.-China trade dispute. However, Tuesday’s recovery reflects easing fears of near-term oversupply and a growing sentiment that recent selloffs may have been overdone.

The market had priced in the impact of OPEC+ supply additions and slowing global demand. Yet, signs are emerging that fundamentals may not deteriorate as sharply as previously feared.

Both West Texas Intermediate (WTI) and Brent crude have moved into contango—a market structure where near-term prices are lower than longer-dated contracts—often seen as a signal of weakening demand and ample supply. Still, analysts caution that the contango is not yet severe enough to suggest a major imbalance.

Analysts Question Severity of Supply Glut

Despite the contango structure, several analysts argue the current fundamentals do not support panic selling. Ole Hansen of Saxo Bank noted that market behavior doesn’t yet reflect conditions that would drive significant inventory builds.

UBS’s Giovanni Staunovo echoed this, saying the futures curve has not steepened into a “super contango,” which would signal a far more serious surplus as projected by the International Energy Agency.

These observations suggest that the oil market may be factoring in a less severe oversupply situation, potentially driven by stable demand trends and limited stock builds, rather than a broad-based glut.

U.S. Inventory Data in Focus

Traders are also closely watching U.S. inventory levels for confirmation. Preliminary estimates from a Reuters poll indicate that crude stocks likely rose last week, while gasoline and distillate inventories fell.

Official data from the American Petroleum Institute (API) and the U.S. Energy Information Administration (EIA) will provide clearer direction later in the week. Previous reports showed larger-than-expected crude builds but deeper product draws, offering mixed signals on underlying demand strength.

Short-Term Oil Prices Forecast: Bearish Bias with Limited Upside

Despite today’s modest rebound, the broader tone remains bearish as long as prices stay below key technical resistance levels. Continued downward pressure from the 50-day and 200-day moving averages, combined with a persistent contango structure, points to weak near-term sentiment.

While some short-covering may lift prices toward the $59.21 retracement level, traders remain cautious, with upside capped unless fundamental or technical catalysts shift meaningfully.

More Information in our Economic Calendar.