Oil Steadies Amid Oversupply Concerns
Oil prices stabilized after a series of declines, weighed down by expectations of increased production from Iraq and Russia. Market indicators suggest a potential oversupply, signaling bearish sentiment.
Brent crude traded below $75 per barrel, while West Texas Intermediate (WTI) hovered above $70. WTI's prompt spread, the price difference between the current and next month's contracts, briefly dipped below zero for the first time since November, indicating a contango market structure.
This shift from a bullish backwardation pattern follows predictions from two major oil forecasting agencies indicating a mild surplus in 2025. Supply concerns escalated over the weekend after Iraqi Kurdistan's president announced a probable resumption of oil exports next month, while President Trump's efforts to end the Ukraine conflict raise the prospect of increased Russian exports.
"Oil market sentiment remains negative, with weak spot prices and deteriorating timespreads pointing towards a weaker physical market," said Warren Patterson, head of commodities strategy for ING Groep NV.
Crude prices have been volatile due to Trump's rapid-fire tariffs and threats of sanctions on producers like Iran. Prices spiked on Friday after Treasury Secretary Scott Bessent's announcement of plans to restrict Tehran's oil exports to less than 10% of current levels but later dropped amid doubts about the feasibility of the plan.