Oil dropped by the most in a month as a key market gauge flashed weakness and OPEC said global crude supplies surpassed demand sooner than anticipated.
West Texas Intermediate fell more than 3%, wiping out three sessions of gains. The US benchmark’s nearest timespread briefly traded in a so-called bearish contango structure — which means current oil prices are cheaper than contracts for delivery further out — for the first time since February, a fresh sign of the widely anticipated supply glut.
OPEC revised estimates for global oil markets to a third-quarter surfeit from a deficit as US production exceeded expectations and the group itself accelerated output. Worldwide oil supplies exceeded demand by 500,000 barrels a day during the period, the group said.
Later on Wednesday, the US Energy Information Administration is scheduled to release its monthly outlook, followed by an International Energy Agency assessment a day later.
Trend-following funds are also selling positions, reinforcing the long squeeze in oil.
“Whipsaw season persists, but we expect CTAs to imminently sell roughly 25% of their maximum size in WTI crude and 10% in Brent, in response to weakening trend signals,” said Dan Ghali, a commodity strategist at TD Securities. A break below $58.50 a barrel in the US benchmark’s December contract may trigger further selling, he added.
Oil has lost ground this year on glut concerns, with the Organization of Petroleum Exporting Countries and its allies restoring capacity, and drillers outside the group raising production. The Paris-based IEA forecasts a record surplus next year, and banks including Goldman Sachs Group Inc. have warned of rising inventories.
Still, premiums have surged for refined fuels like gasoline and diesel, in part because of a slew of refinery outages, traders said, including attacks on Russian plants.
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