WTI recovers slightly amid oversupply fears and EIA inventory surge
- The Oil market remains under pressure, weighed down by expectations of an oversupplied global market and a strong weekly increase in US inventories.
- The EIA report shows a much larger-than-expected rise in crude stockpiles, intensifying concerns about weakening demand.
- Improved sentiment after the US government reopened is nevertheless helping the WTI recover slightly.
West Texas Intermediate (WTI) US Oil trades around $58.80 on Thursday at the time of writing, up 0.70% on the day. Crude Oil is attempting to stabilize after two highly volatile days, including a drop of more than 4% on Wednesday, driven by persistent fears of a global supply glut.
The market remains vulnerable to several fundamental factors. The Energy Information Administration (EIA), which recently revised upward its outlook for US Oil production in 2025, released on Thursday weekly stockpile data that largely exceeded expectations. Crude inventories rose by 6.413 million barrels, well above the 2 million expected and already higher than last week’s 5.202 million increase. This rapid accumulation strengthens the view of an oversupplied market amid still-fragile demand conditions.
At the same time, the International Energy Agency (IEA) has softened its outlook on peak Oil demand, now expecting global consumption to continue rising through 2050. This revision adds to the message from the Organization of the Petroleum Exporting Countries and its allies (OPEC+), which forecasts a supply surplus from 2026 onward, after noting that output already exceeded demand in the third quarter. According to Reuters, an analyst at DBS Bank stressed that OPEC+’s shift in its 2026 balance outlook has triggered bearish sentiment by increasing concerns over a lasting supply imbalance.
One factor is, however, helping ease some of the pressure on prices: the reopening of the US federal government. President Donald Trump signed the funding bill ending the longest shutdown in US history. The return of federal agencies to normal operations supports risk appetite and raises hopes that the resumption of economic data releases will quickly clarify the economic outlook. Improved sentiment allows Oil prices to recover following Wednesday’s sharp correction.
Traders will continue monitoring upcoming monthly reports from the IEA and OPEC+, as well as new US economic data, to assess whether the current rebound in WTI can extend or whether bearish fundamentals will ultimately prevail.
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
Ghiles Guezout
FXStreet
Ghiles Guezout is a Market Analyst with a strong background in stock market investments, trading, and cryptocurrencies. He combines fundamental and technical analysis skills to identify market opportunities.
