There are indicators that the long-anticipated provide glut is now hitting the market, with the six-month and 12-month time period spreads flipping into contango.
That’s what analysts at BMI mentioned in a BMI report despatched to Rigzone by the Fitch Group on Friday, including that, “sentiment is souring, with the ratio of lengthy to quick positions held by managed cash in Brent crude falling to 1.8 as of mid-October, its lowest stage since April, within the wake of the reciprocal tariff bulletins”.
“Absent main export disruptions in Russia, costs will stay underneath stress over This fall 2025 and into early 2026, amid looser supply-demand fundamentals,” the analysts added.
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“Nevertheless, a pause within the OPEC+ provide hikes – and scope for restricted market intervention in response to excessive value weak spot – ought to assist to place a ground underneath Brent,” they continued.
The BMI analysts famous within the report that, from the second half of 2026, they “anticipate stronger demand progress, slower provide progress, and more healthy market sentiment will foster a restoration in costs”.
“That mentioned, this hinges on a number of key assumptions, together with near-term restraint by OPEC+, a significant slowdown within the U.S. shale patch, sturdy import demand in Mainland China, and an improved international macroeconomic backdrop heading into 2027,” the analysts mentioned.
The BMI analysts acknowledged within the report that oil costs have come underneath stress this month, stating that Brent fell to a five-month low of $61 per barrel on October 20, “earlier than partially rebounding to above $64 per barrel on the time of writing on October 23”.
“The current soar was triggered by the announcement that U.S. President Donald Trump was imposing Ukraine-related sanctions on Russia, together with sanctions on Lukoil and Rosneft, two main exporters of Russian oil,” the analysts added.
Within the report, the BMI analysts highlighted that their three to 6 month outlook for oil was “impartial” and that their 12 to 24 month outlook was “neutral-bullish”. The report identified that BMI expects the entrance month Brent crude value to common $68 per barrel this 12 months and $67 per barrel in 2026.
In a report despatched to Rigzone by the Skandinaviska Enskilda Banken AB (SEB) workforce on Friday, SEB Chief Commodities Analyst Bjarne Schieldrop identified that Brent jumped to an intraday excessive of $66.36 per barrel yesterday after having touched an intraday low of $60.07 per barrel on Monday.
Schieldrop famous in that report that Brent was “falling again 0.4 % this morning to $65.8 per barrel”.
In a market evaluation despatched to Rigzone at the moment, Michael Brown, Senior Analysis Strategist at Pepperstone, famous that crude benchmarks “had been the massive mover yesterday, with each Brent and WTI barreling greater, including a slick 5 % apiece; the catalyst right here being the U.S. announcement of sanctions on Russia’s largest oil refiners”.
“Whereas I’m all the time tempted to fade any geopolitically induced market strikes, it more and more appears to be like as if crude has put in a backside, particularly with the U.S. sitting on the bid because the SPR [Strategic Petroleum Reserve] is refilled,” he added.
In an announcement posted on its web site on October 21, the U.S. Division of Vitality (DOE) introduced a brand new solicitation to buy a million barrels of crude oil for supply to the SPR on the Bryan Mound website.
The assertion mentioned the solicitation is in accordance with the Working Households Tax Reduce which President Trump signed into legislation earlier this 12 months. The laws appropriated $171 million to start refilling the SPR, the assertion highlighted.
“Because of the President and Congress, we’re capable of start the method of refilling the SPR,” Vitality Secretary Chris Wright mentioned within the assertion.
“Whereas this course of received’t be full in a single day, these actions are an necessary step in strengthening our power safety,” he added.
To contact the writer, e-mail andreas.exarheas@rigzone.com
