WTI Crude (CL=F) and Brent (BZ=F) Around $58–$62 in an Oversupplied Market
Spot Levels and Benchmark Differentials at Year-End 2025
West Texas Intermediate WTI / CL=F trades in the $58–$58.50 zone, with snapshots at $58.20 (-0.31%) and $58.50 (+0.21%). Brent BZ=F holds near $62–$62.50, quoted at $62.06 (-0.51%) and $62.47 (+0.14%) after a five-day rally of almost 6%. Across 2025, crude has stayed in a $60–$81 corridor, with December swinging between a $63.93 high (Dec 5) and a $59.03 low (Dec 16), underscoring range trading rather than trend reversal. Regional benchmarks echo the same theme: Murban near $62.91 (-0.21%), Louisiana Light at $60.88 (+2.49%), the OPEC Basket at $61.22, Mars US around $70.06 (-1.30%), and Bonny Light up at $78.62 (-2.84%). Products are steady, with gasoline at $1.747/gal (+0.20%) and U.S. natural gas near $4.269 (-3.15%), signaling no demand shock big enough to flip the crude balance.
Structural Oversupply: 1.4 Billion Barrels and a 3.8 mb/d Surplus
The core fundamental for Oil / CL=F / BZ=F is a structural glut, not a temporary wobble. Industry data shows roughly 1.4 billion barrels of crude afloat or awaiting sale, about 24% above the 2016–2024 seasonal average. The IEA expects global supply to exceed demand by at least 3.8 million barrels per day in 2026, setting up one of the most extreme supply–demand mismatches in modern oil market history. The U.S. EIA projects Brent around $55 in Q1 2026 and roughly pinned there across the year. With WTI now near $58 and Brent $62+, the current pricing looks like a mid-cycle bounce inside a surplus regime, not the start of a new supercycle.
OPEC+ and Non-OPEC Output: Capacity Expansion Into Weak Demand
Supply behavior reinforces the bearish structure. The “Big 4” Gulf producers (Saudi Arabia, UAE, Iraq, Kuwait) have lifted combined output from 18,346 kb/d in April to 20,073 kb/d in October, adding 1,727 kb/d, while still holding about 766 kb/d of spare capacity. Across OPEC+, cumulative expansions since April exceed 2.7 million b/d, with another 137 kb/d increase scheduled, even as demand forecasts are left unchanged. Inside OPEC-12, October saw a net flat profile: Saudi Arabia up 54 kb/d, UAE up 16 kb/d, Kuwait up 13 kb/d, offset by cuts in Venezuela (-27 kb/d), Iraq (-21 kb/d) and Iran (-19 kb/d). Non-OPEC liquids and NGL expectations for 2025 were revised +100 kb/d, adding to the wave of barrels that WTI and Brent must absorb. This output posture keeps significant pressure above roughly $65 Brent and $60 WTI.
Demand, Inventories and U.S. Macro: Growth Without Tightness
On the demand side, the U.S. economy is expanding at the fastest pace in two years, a key driver of the recent five-session rally that pushed Brent to $62.47 and WTI to $58.50. U.S. crude inventories for the week ending December 12 declined by 1.274 million barrels, beating expectations for a 1.1 million barrel draw, with Cushing stocks down 742,000 barrels. Forecasts for the following week vary widely, from a 1.1 million barrel build to a 6.4 million barrel draw, highlighting uncertainty. However, globally, stocks are trending higher. Refineries running at high utilization are lifting gasoline and distillate inventories, and the 1.4bn bbl floating surplus confirms that macro strength is not translating into a tight physical market. The result is a contradictory but clear message: growth is real, but oil remains oversupplied, limiting upside for CL=F and BZ=F.
Geopolitical Premium: Venezuela and Russia Put a Floor Under CL=F and BZ=F
Geopolitics is the main reason WTI and Brent are not already trading in the low-50s. U.S. enforcement against Venezuelan exports has escalated from rhetoric to direct action, with authorities pursuing a third tanker in under two weeks, boarding one vessel and targeting another. That raises insurance costs, reduces the pool of willing buyers, and slows PDVSA loadings, with storage constraints likely to hit production if flows continue to be choked. At the same time, Ukraine’s first drone strike on a Russian shadow-fleet tanker in the Mediterranean introduces fresh risk to Russian volumes that underpin large parts of Asian and global refining. Earlier this month, disruption fears around Venezuela and Russia triggered about a 2% jump in oil prices, illustrating how quickly risk premium re-prices the curve. Sanctioned ships still loading Venezuelan barrels show crude is still moving, but under higher friction. The geopolitics acts as a soft floor for Brent (BZ=F) in the high-50s to low-60s and WTI (CL=F) in the mid-50s, without changing the underlying surplus path.
Gas, LNG and the Petronas–CNOOC Deal: Structural Headwind for Crude
The Petronas–CNOOC LNG agreement adds another structural drag on long-term oil demand. Under the deal, Petronas LNG Ltd. will supply 1.0 MTPA of LNG to CNOOC Gas & Power Singapore Trading & Marketing, directly aligned with China’s “Dual Carbon” goals of peaking emissions before 2030 and achieving carbon neutrality by 2060. China is one of the largest global LNG buyers and is increasingly locking in long-term contracts to avoid spot volatility. In practice, these contracts embed gas, not oil, as the marginal fuel for incremental power and industrial demand. While crude remains central for transport and petrochemicals, each new long-term LNG tranche shifts future energy-mix growth away from oil, reinforcing the ceiling above WTI (CL=F) and Brent (BZ=F).
Technical Structure: Counter-Trend Rally Into Heavy Resistance
Technically, both WTI crude (CL=F) and Brent (BZ=F) are staging counter-trend rallies into clear resistance. For CL=F, price is pressing into the 50-day EMA and a well-defined downtrend line, together forming a hard ceiling. The bounce from the mid-50s back to around $58 is consistent with short covering in thin holiday liquidity, not with a confirmed trend reversal. The referenced futures work frames the recent move as mostly position adjustment in a market still dominated by excess supply and weak demand. Brent shows an almost identical profile: BZ=F is retesting its own 50-day EMA and descending trendline after rebounding from the high-50s back above $62. There are no confirmed higher-high / higher-low sequences that would justify calling a new uptrend; the larger structure remains bearish, with rallies into resistance viewed as selling zones.
Energy Equities at $57 WTI and $60–$62 Brent: Market Prices a Long Downturn
Listed energy names already trade as if $55–$60 Brent and sub-$60 WTI are the 2026 base case. Since September 2025, the sector has lagged broader indices. Chevron (CVX) is down about 9% from its recent peak, ConocoPhillips (COP) shows a roughly similar drawdown, Occidental Petroleum (OXY) is off around 20% year-to-date, and Marathon Petroleum (MPC) has fallen approximately 16% in a month. On the corporate side, ExxonMobil has announced about 2,000 job cuts, with Chevron, ConocoPhillips and others also cutting staff, signalling management teams are preparing for a prolonged low-price environment rather than a brief dip. Market leadership has shifted from “volumes and growth at $70–$80 oil” to balance sheet strength, cost position and free cash flow resilience at $55–$60 Brent. That factor rotation is exactly what you expect in a surplus-driven downcycle.
Investor Positioning: Defensive Stance, Use Spikes to Reduce Exposure
For portfolio construction, the numbers point to a defensive, not opportunistic stance on Oil / CL=F / BZ=F. With 1.4bn barrels floating, a forecast 3.8 mb/d surplus in 2026, and official guidance anchoring Brent near $55, aggressive contrarian buying of broad energy is misaligned with the tape. Tactical approach: treat geopolitics-driven spikes that push WTI toward the low-60s or Brent toward the high-60s / $70 as chances to trim or hedge, not to chase upside. If exposure is required, concentrate it in low-cost, low-leverage integrated majors with demonstrably sustainable dividends at $55–$60 Brent, and avoid high-cost producers that require $70+ to justify capex and payouts. Dividend yield is only meaningful when backed by balance sheet strength and low break-evens.
Verdict for Oil, WTI (CL=F) and Brent (BZ=F): Sell/Underweight, Fade Strength
Combining spot prices, supply, stocks, technicals and equities, the picture is consistent. WTI (CL=F) around $58 and Brent (BZ=F) near $62 sit on top of: a 1.4bn barrel overhang (+24% vs the 2016–2024 norm), a projected 3.8 mb/d 2026 surplus, an official base case with Brent at roughly $55, ongoing OPEC+ increases and spare capacity of ~766 kb/d, plus charts that show rallies into the 50-day EMA and downtrend lines without trend reversal signals. Geopolitical shocks in Venezuela and Russia and strong U.S. macro data are enough to create floors and volatility, but not enough to overturn the structural surplus. The clean call: keep Oil / WTI / Brent on a Sell / Underweight bias into 2026, and use strength to reduce, not to build, crude-linked risk.
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