Oversupply Drags WTI Below $58 as Global Oil Glut Deepens

West Texas Intermediate crude traded sharply lower through Thursday, December 12, settling at $57.60 per barrel and posting a week-to-date loss of $2.48, or 4.13%. Market sentiment stayed firmly bearish as traders focused on heavy global supply, soft demand projections, and fading geopolitical premiums. With the week still in progress, the tone heading into Friday remained pressured by fundamental forces that continued to outweigh short-lived intraday rebounds.
Oversupply has become the defining feature of the market, with traders questioning whether any upcoming catalysts are strong enough to offset the growing imbalance stretching into early 2026.
OPEC+ Output Strategy Pressures Oil Prices Forecast
OPEC+ continued to lift global supply through its aggressive unwind of voluntary production cuts, a shift that began earlier in 2025 and gained speed into year-end. The group’s move to restore the entire 2.2 million barrel per day reduction by September — a full year ahead of schedule — set the tone for a market that is now consistently oversupplied. December discussions kept output steady for the first quarter of 2026, but traders widely expect increases later in the year, especially from Saudi Arabia as it pushes to reclaim market share from non-OPEC producers.
IEA data reinforced the oversupply narrative, reporting that world oil supply reached 109 million barrels per day in November. While sanctioned producers saw temporary declines, growing output from OPEC+, the U.S., and other non-OPEC regions contributed to a global environment where barrels outpaced consumption on a sustained basis. For retail futures traders, the message from the physical market remains clear: supply continues to build, which has historically limited rallies and contributed to downside pressure when demand fails to keep pace.
Demand Growth Still Underwhelming Despite Fed Rate Cut
Demand forecasts offered little relief. The IEA lifted its 2026 demand outlook but still sees only modest growth — 830,000 barrels per day in 2025 and 860,000 barrels per day in 2026. OPEC stood by its more bullish 1.4 million barrel per day forecast for 2026, though traders have increasingly discounted it due to persistent economic softness in Europe, slower-than-expected consumption in China, and ongoing substitution away from oil in the Middle East.
The EIA’s Short-Term Energy Outlook added additional weight to the bearish tone by projecting only 1.1 million barrels per day of demand growth in 2025 and 1.2 million in 2026. These numbers suggest inventories are likely to remain elevated unless supply slows significantly.
The Federal Reserve’s rate cut on Thursday offered a glimmer of potential support for consumption by reducing borrowing costs. However, the Fed’s caution about further cuts muted any immediate impact on energy demand expectations.
Geopolitics Remove Support Instead of Creating It
Russia-Ukraine diplomacy took center stage as peace efforts advanced, stripping away risk premiums that had previously offered the market occasional support. The announcement of productive discussions involving U.S. and European officials pushed traders to price in lower geopolitical risk.
Even so, Russia’s supply picture stayed complicated. Ukrainian drones struck a Caspian Sea rig for the first time, temporarily halting operations. Russian oil revenue fell to $11 billion in November — the lowest since early 2022 — as sanctions and attacks curbed exports. Black Sea shipments dropped sharply, and Western sanctions on Rosneft and Lukoil continued to disrupt flows. Yet Russia still moved barrels through shadow fleet tankers, shipping mainly to China and India.
In Venezuela, the U.S. seizure of a large tanker escalated tensions and pushed Asian buyers to demand steeper discounts. Venezuelan production held between 950,000 and 1,130,000 barrels per day, with roughly 85% of exports heading to China after Chevron’s license was revoked earlier this year. While the global supply impact remained modest, traders noted the growing uncertainty around future Venezuelan exports.
U.S. Inventory Data and Output Growth Add to Bearish Tone
The EIA reported a 1.8 million barrel crude inventory draw for the week ending December 5, bringing stocks to 425.7 million barrels — about 4% below the five-year average. Gasoline and distillate inventories increased, while total commercial petroleum stocks fell 3.2 million barrels. The draw failed to lift prices as the broader supply outlook overshadowed the weekly snapshot.
U.S. production continues to rise, with domestic output projected to reach a record 13.6 million barrels per day in 2025. The EIA’s re-benchmarking added another 52,000 barrels per day to estimates, signaling stronger-than-expected performance from shale producers. Still, with WTI trading under $60, traders questioned whether growth can hold, as many Permian producers need prices above $62–64 to break even.
Weekly Light Crude Oil Futures
Trend Indicator Analysis
Light crude oil futures are on track to finish the week lower after a two-week rally fizzled out after failing to overcome key resistance levels like the 52-week moving average at $61.96 and the long-term 50% level at $63.69.
Late in the week, the market pierced the previous swing bottom at $57.10, confirming the downtrend and opening the door for follow-through selling into the major swing bottom at $55.01.
The $55.91 main bottom was strong enough to trigger a surge to $62.54 in late October, so a failure to hold next week could fuel the start of an acceleration to the downside.
Although the market may experience some bottom-picking and short-covering rallies, it’s difficult to imagine the start of a meaningful rally until buyers overcome the 52-week moving average and create enough upside momentum to breakout over the $63.69 pivot.
Weekly Technical Forecast
The direction of the weekly Light Crude Oil Futures market for the week ending December 19 is likely to be determined by trader reaction to the Fibonacci retracement level at $59.39.
Bullish Scenario
A sustained move above the Fibonacci level at $59.39 will signal renewed buying interest. If this move generates sufficient upside momentum, a retest of the 52-week moving average at $61.96 could follow.
Bearish Scenario
A sustained move below the 61.8% level at $59.39 will indicate active selling pressure. This could trigger a sharp decline into $55.91, with potential for an extended move down to $55.22 or lower.
Short-Term Market Forecast: Bearish Into Next Week
WTI’s decline reflects an environment defined by oversupply, weak demand growth, and reduced geopolitical pricing support. While peace talks, Venezuelan tensions, and sanctions on Russia may create intraday volatility, none currently counter the broader fundamental imbalance. The market heads into next week with a bearish short-term outlook, with traders watching for any supply disruptions or shifts in OPEC+ messaging that could temporarily support prices. For now, the oversupply trend signals continued downside risk unless a major catalyst alters the fundamental backdrop.
Technically, the market remains under pressure below the 52-week moving average at $61.96. After solidifying resistance, bearish traders are now in a position to work on the downside. Near-term potential targets include swing bottoms at $57.10, $55.91 and $55.22. The latter could be the trigger point for an acceleration to the downside.