Oil Price Forecast - Oil Falls Below $65 as OPEC+ Output Hike

Oil Prices (WTI CL=F and Brent BZ=F) Retreat as OPEC+ Output Rise and Global Glut Pressure Market Below $65

Crude oil markets remain under heavy pressure as both WTI (CL=F) and Brent (BZ=F) continue to extend their slide below recent trading ranges. At the last session, West Texas Intermediate settled at $61.49 per barrel, down 0.32%, while Brent Crude slipped to $65.18 per barrel, down 0.44%, with traders reacting to an output hike from OPEC+ and growing evidence of oversupply across key consuming regions. The alliance confirmed a planned increase of 137,000 barrels per day (bpd) for November, a move smaller than expected but still enough to deepen market fears of excess production through Q4 2025. Despite earlier support from geopolitical risk in Russia and the Middle East, the market narrative has turned toward persistent inventory builds and muted demand growth.

OPEC+ Balances Modest Supply Hike Against Weakening Fundamentals

OPEC+ remains cautious, choosing a restrained increase rather than the aggressive boost some members lobbied for, but the announcement failed to stabilize sentiment. Saudi Arabia’s decision to keep its official selling price to Asia unchanged—despite forecasts for a premium—was interpreted as a signal that the cartel anticipates limited near-term upside. JPMorgan’s data showed global oil inventories, including floating storage, grew by 123 million barrels in September, the fastest pace since 2023. That stock build contrasts sharply with India’s fuel consumption, which rose 7% year-on-year in September, revealing a clear supply-demand imbalance. The build-up of barrels on water further implies traders are struggling to place excess cargoes, reinforcing downside pressure on physical benchmarks.

Geopolitical Disruptions and Refinery Damage Offer Only Temporary Support

While a drone strike on Russia’s Kirishi refinery earlier this month knocked out its most productive distillation unit and temporarily removed up to 230,000 bpd from export capacity, the market reaction was muted. Analysts estimate repairs will take roughly a month, but replacement barrels from Asia and the Middle East have already filled much of the gap. China accelerated its strategic build-out, commissioning new reserve tanks expected to expand national capacity by 80 million barrels by 2026, giving Beijing flexibility to absorb cheap supply. With additional flows from the U.S., Brazil, and Guyana expected into year-end, any geopolitical premium has been overwhelmed by fundamental softness.

Big Oil Under Pressure as Brent Drops Below $65 and Margins Shrink

The slump in prices has quickly filtered through to corporate strategy. Major producers—ExxonMobil (XOM), Chevron (CVX), BP (LON:BP), Shell (LON:SHEL), and TotalEnergies (TTEF.PA)—face what analysts call a “dividend reckoning.” With Brent now nearly 40% below its 2024 average and forecasts from Citi and Goldman Sachs suggesting a range of $50–$60 per barrel in 2026, payout sustainability has come into question. Most majors require prices above $80 per barrel to maintain current buyback and dividend levels, which together have exceeded $100 billion per year since 2022. TotalEnergies has already announced a reduction in buybacks and a $7.5 billion cost-cutting program through 2030, while BP and Chevron have scaled down repurchases to preserve balance-sheet strength. More than a dozen integrated producers, including ExxonMobil and Shell, are preparing workforce reductions for 2025–2026 as debt ratios rise.

U.S. Output Surge and Inventory Builds Intensify the Oversupply Outlook

The Energy Information Administration (EIA) raised its 2025 U.S. output forecast again, projecting a record 13.7 million bpd, a level that risks amplifying the global glut. U.S. commercial inventories expanded by 5.4 million barrels last week, marking a fourth consecutive build. Gulf Coast storage utilization now exceeds 72%, the highest since 2020. Refinery throughput remains subdued following fires at Chevron’s Los Angeles plant and Marathon’s Galveston Bay facility, yet the builds persist—evidence that demand growth is stagnating even as production climbs. The American Petroleum Institute data later today will be scrutinized for confirmation, but the pattern points to a structural oversupply likely to cap WTI below $63 in the near term.

Emerging-Market Demand and Currency Trends Offer Limited Cushion

India and China remain the two bright spots for consumption, yet even their appetite has not absorbed the surplus. India’s import premiums for Middle East cargoes narrowed by $0.60 per barrel in October, the lowest since 2022, while China’s teapot refiners have slowed purchases after using up import quotas. In South Africa, where the rand strengthened to R17.21 per USD, the fall in Brent toward $65.51 is projected to translate into retail petrol price cuts of up to 70 cents per liter in November, demonstrating how the global downtrend is filtering into consumer markets. However, the same dynamic—currencies stabilizing while crude drops—highlights weakening speculative interest in commodities broadly.