WTI Crude Oil plunges as OPEC and IEA warn of oversupply risks
- WTI falls nearly 2% to trade around $62.20, erasing early-week gains.
- OPEC+ output rises by 509,000 bpd in August, total production hits 42.4 million bpd.
- IEA warns of 2.5 million bpd global surplus in H2 2025; trims demand forecast to 740,000 bpd.
West Texas Intermediate (WTI) Crude Oil comes under renewed selling pressure on Wednesday, paring most of the gains registered earlier this week, as investors respond to back-to-back bearish signals from the Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA) monthly reports.
At the time of writing, WTI trades around $62.20 per barrel, down nearly 2.0% on the day, retreating from a weekly high near $63.80.
The OPEC Monthly Oil Market Report (MOMR) for September projected that global Oil demand growth would remain steady at 1.3 million barrels per day in 2025, but highlighted a sharp increase in crude production by OPEC+ countries. According to the report, OPEC+ output jumped by 509,000 barrels per day in August, bringing total production to 42.4 million barrels per day. Meanwhile, hedge funds turned net short on NYMEX WTI futures for the first time in months, fueling further downside pressure.
Separately, the IEA’s September Oil Market Report, released earlier on Thursday, flagged a potential global surplus of 2.5 million bpd in H2 2025, driven by surging output from the US, Brazil, Canada, and OPEC+ members. The agency trimmed its demand growth forecast to just 740,000 bpd, citing weakening consumption trends in advanced economies and soft refinery margins in Asia.
Meanwhile, fresh data from the US Energy Information Administration (EIA) released on Wednesday showed a surprise 3.9 million barrel build in US crude inventories last week, underlining sluggish end-of-summer demand.
Technically, WTI is now hovering just above a key horizontal support zone around $62.00. A decisive daily close below this zone could pave the way for a deeper pullback toward $60.50 and $59.50 in the coming days. On the flip side, immediate resistance lies at the 21-day Simple Moving Average (SMA), at $63.21.The Relative Strength Index (RSI) on the daily chart prints at 43.50, indicating weakening bullish momentum and reinforcing the risk of further losses. With supply-side fundamentals and technical signals aligning to the downside, WTI may continue to face headwinds.
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
Author
Vishal Chaturvedi
FXStreet
I am a macro-focused research analyst with over four years of experience covering forex and commodities market. I enjoy breaking down complex economic trends and turning them into clear, actionable insights that help traders stay ahead of the curve.
