Oil prices declined in early trading on Wednesday as investors assessed the impact of a potential supply surplus and renewed tensions between the United States and China.
Brent crude futures slipped 12 cents, or 0.19%, to $62.27 a barrel by 0021 GMT, while U.S. West Texas Intermediate (WTI) crude fell 10 cents, or 0.17%, to $58.60. Both benchmarks closed at five-month lows in the previous session.
The decline followed a report from the International Energy Agency (IEA) on Tuesday, warning that the global oil market could see a supply surplus of up to 4 million barrels per day in 2026. The agency said higher production from OPEC+ members and non-OPEC rivals, combined with slow demand growth, could widen the glut more than previously expected.
“The market is becoming increasingly concerned about oversupply, especially as inventories start to build,” Yang An, an analyst at Haitong Futures, said. “Beyond U.S.-China trade relations, the key driver for oil prices now is how global inventories change in the coming months.”
Trade tensions weigh on demand
Adding to pressure on prices, trade frictions between Washington and Beijing have escalated in recent days. Both countries began imposing new port fees on ocean carriers this week, while China announced sanctions on five U.S.-linked subsidiaries of South Korean shipbuilder Hanwha Ocean.
The latest measures follow China’s decision to expand export controls on rare earth materials, which are critical to the technology and energy sectors. In response, President Donald Trump said the United States may raise tariffs on Chinese goods to 100% and tighten export restrictions on software starting Nov. 1.
Analysts warned that the deepening dispute between the world’s two largest economies could slow global trade and energy consumption, dampening prospects for oil demand recovery in late 2025 and 2026.
Market awaits inventory data
Traders are also monitoring U.S. oil stockpile data for further indications of market balance. A preliminary survey of six analysts estimated that U.S. crude inventories likely rose by about 200,000 barrels in the week ending Oct. 10, while gasoline and distillate stocks may have declined.
The American Petroleum Institute (API) will release its weekly industry report at 4:30 p.m. EDT (2030 GMT) on Wednesday, followed by official figures from the U.S. Energy Information Administration (EIA) on Thursday at 10:30 a.m. EDT (1430 GMT). Both reports were delayed by one day due to the Columbus Day and Indigenous Peoples’ Day holiday on Monday.
Despite weaker prices, some analysts believe short-term volatility could persist until there is clearer evidence of supply cuts or stronger consumption data. Others say the ongoing supply surplus signals that producers may need to revisit output targets to stabilize the market.
“The balance between production discipline and demand recovery remains fragile,” Yang said. “Unless either side improves significantly, oil prices could stay under pressure for the rest of the year.”
At present, market participants remain cautious as they await fresh economic data and policy signals from both major producers and consumers. The combination of potential oversupply and trade uncertainty continues to cast a shadow over the global energy outlook.
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