Oil Price Forecast: WTI at $57 and Brent at $61 Struggle Under 2026 Supply Glut Fears

Oil Price Outlook: WTI CL=F Stuck Below $60 As 2026 Surplus Narrative Tightens The Noose

Current Position Of WTI CL=F And Brent BZ=F

Front-month WTI (CL=F) is anchored around $57.10–$57.50 per barrel with the last settlement near $57.44, while Brent (BZ=F) trades around $61.12, both down a bit more than 4% week-on-week and sitting close to recent lows. Trade in WTI has repeatedly stalled every time price approaches the $60.00 psychological barrier, confirming firm selling pressure above that level. On the physical and benchmark side, Louisiana Light is around $59.62, the OPEC Basket is roughly $61.28, Mars U.S. is near $70.36, and Nigeria’s Bonny Light sits in the high-70s, while Iran’s heavy crude averaged $64.25 in November versus $64.74 in October and about $70.21 year-to-date compared with $80.30 in the same period of 2024. That drop in average realized prices across major grades confirms a structurally cheaper oil environment rather than a one-off correction.

Macro Narrative: 2026 Oversupply Versus OPEC Demand Story For Oil

The central macro driver behind current pricing is the conviction that 2026 will be defined by oversupply. The IEA still projects a surplus in the region of 3.8–4.0 million barrels per day for 2026 even after trimming earlier estimates, a large imbalance against global demand and more than enough to keep forward curves soft and cap rallies in WTI and Brent. OPEC counters with its own narrative, projecting demand for OPEC+ crude of roughly 43 million bpd in 2026, close to the combined October production around 43.07 million bpd from OPEC and allied producers. Iran’s output sits near 3.22 million bpd within that total. Under OPEC’s assumptions, the market looks near balanced if quotas hold. Price action in CL=F and BZ=F shows traders are discounting the IEA’s more bearish surplus scenario more heavily than OPEC’s balanced view.

OPEC+ Policy, Existing Cuts, And Why CL=F Still Fails At $60

OPEC+ has opted to hold its line: more than 3 million bpd of cuts remain in place and the group has paused any output hikes for at least Q1 2026. On paper that is supportive for Oil, but in practice it has not been enough to dislodge WTI from the high-50s. Every move by CL=F toward $60.00 meets selling, pushing price back into the $57–58 band. The message from positioning is that traders do not yet believe OPEC+ will tighten quickly or deeply enough to neutralize the projected 2026 surplus, especially with non-OPEC growth and sanctioned flows working in the background. For Brent (BZ=F) the pattern is similar: attempts to stabilize above $63–64 get faded, with benchmarks sliding back toward $61 despite geopolitical disruptions that, in a tighter market, would command a much larger risk premium.

Geopolitical Risk Premium: Venezuela, Russia–Ukraine, And A Market That Shrugs Off Shocks

The current phase is defined less by classic supply-shock rallies and more by a structural surplus that makes the market discount disruptions. The seizure of a Venezuelan tanker carrying around 1.8 million barrels of Merey crude and the effective stranding of roughly 11 million barrels of additional Venezuelan cargoes should, in a tight environment, have sent prices sharply higher. Instead, WTI and Brent only bounced briefly before resuming their slide, signaling that traders view Venezuelan exports as too small, in today’s context, to override the broader glut story. The same dynamic is visible in Russia–Ukraine risk. Drone and missile strikes against Russian refineries and export infrastructure move the tape intraday, but price is more sensitive to any whiff of peace-talk progress. A credible path to a settlement implies the potential for more Russian barrels to be normalized over time, and that prospect weighs more on CL=F and BZ=F than the sporadic damage to individual assets lifts them. The risk premium is compressing because the market believes barrels will keep finding their way out, even through rerouted or “shadow” logistics.

Regional Fundamentals: Nigeria’s Gas Flare Program, Pipeline Shocks, And African–ME Benchmarks

Nigeria’s decision to approve 28 companies to capture flared gas under its Gas Flare Commercialization Program is one of the few tangible structural changes on the supply side. Regulators estimate 250–300 million standard cubic feet per day of gas could be captured and monetized if projects proceed, attracting as much as $2 billion in investment. At the same time, an explosion on the Escravos–Lagos gas pipeline, with capacity of about 2.2 billion scf/day, temporarily disrupted flows to power and industrial users in the southwest. The combined signal is clear: infrastructure remains fragile, but the policy direction is toward monetizing waste gas and underpinning power generation. For Oil, this leans slightly bearish over the medium term: better gas capture and supply can support higher utilization and reduce some local scarcity premia, while still leaving enough liquids and associated production to feed the global surplus theme. On the Middle Eastern side, Iran’s heavy crude pricing near $64.25 in November with a year-to-date average just above $70 versus $80+ last year confirms that even higher-cost fiscal producers are being pulled into a lower-price regime. The OPEC Basket mirrors this with a $64.46 November average and $70.27 year-to-date, compared with $80.49 a year earlier, underscoring the reset in baseline pricing across the producer group.

U.S. Inventories And Product Stocks: Conflicting Weekly Prints But Net Bearish For Oil

Weekly U.S. inventory data has delivered a mixed but ultimately bearish signal. One EIA report for early December showed commercial crude stocks falling by around 1.8 million barrels to roughly 425.7 million, but that apparent positive was overwhelmed by a 6.4-million-barrel build in gasoline and a 2.5-million-barrel increase in distillate stocks, indicating refiners are struggling to push product into end-user demand. A later print showed a 2.8-million-barrel crude build, the third consecutive weekly increase, which directly supports the oversupply thesis: production and imports are outpacing refinery pull-through. For WTI (CL=F) this combination means that even when crude inventories tighten in one week, swollen product tanks force refiners to cut runs later, capping demand for feedstock. That configuration explains why rallies into the high-50s are sold and why the $60 line keeps acting as a lid rather than a floor.

Technical Setup: CL=F In A Bearish Range With $60 As A Hard Ceiling

Technically, WTI is trading like a textbook bearish consolidation. Price is locked below a major psychological and technical barrier at $60.00, with repeated intraday spikes toward that level being rejected. Immediate support sits around $56.00–$56.50, with the tape oscillating near $57 as traders test both edges of the range without conviction in a breakout. Daily momentum indicators, including RSI and MACD, point to fading upside energy and gradually strengthening negative momentum, consistent with a market where sellers are in control and rallies are opportunities to reload shorts rather than signals of a new uptrend. Brent (BZ=F) draws a mirror image with resistance in the $63–64 area and support near $59–60, aligning with a broader low-60s band that fits the 2026 surplus narrative and the forecasting bands from major agencies and banks.

Derivatives, Positioning, And How The Market Is Being Paid To Stay Bearish On CL=F

Derivatives strategy commentary around Oil reflects a consensus that upside is capped while downside remains open into early 2026. With WTI failing repeatedly at $60, put structures targeting a move toward the year’s low around $54.80 line up with both the fundamental and technical picture. A break through the $56.00 support zone would likely accelerate toward that level. At the same time, income strategies such as selling out-of-the-money calls or using bear call spreads with strikes at or above $61 for early-2026 expiries exploit both the strong resistance overhead and time decay as long as CL=F remains range-bound or drifts lower. The key point is that the volatility surface and skew reward traders who fade strength rather than buy dips, reinforcing the impression that crude is a market to sell into rallies while the oversupply theme dominates.

Demand Dynamics: Slower EV Adoption Helps Oil, But Not Enough To Break The Surplus

On the demand side, global EV adoption has clearly slowed. The U.S. is seeing weaker incremental EV demand, China’s EV market has plateaued from its earlier explosive growth, and some policy support in key regions is being recalibrated. This backdrop favors Oil demand over a multi-year horizon, especially for gasoline and diesel, because internal combustion remains entrenched and the substitution pace is less aggressive than forecast a few years ago. However, demand growth is still modest in absolute terms, with incremental global oil consumption running under 1 million bpd per year, which is not enough to erase a projected 3.8–4.0 million bpd surplus by 2026 without substantial supply discipline. That explains why, despite supportive long-term demand signals, Brent is anchored near $61 instead of revisiting the $90–100 zone seen during the 2022 supply shock, and why WTI is pinned below $60.

Structural Supply Drivers: Tanker Rates, New Projects, And Sanctioned Flows Rewiring Trade

Tanker rates on some long-haul routes have surged, in certain cases by hundreds of percent, because of sanctions, shadow-fleet incidents, and rerouting of Russian and Kazakh barrels away from traditional channels. Higher freight costs normally tighten effective supply for marginal buyers, but they have not been enough to offset the impact of growing upstream capacity. New projects in Canada (such as expansions at Cenovus and Suncor), ongoing work in the UK North Sea, and fresh investments in Arctic fields are all pushing available capacity higher into 2026–2027. India is on track to keep absorbing discounted Russian crude whenever spreads justify it, ensuring those barrels remain in circulation even if they bypass Western buyers. Negotiations over new pipelines and alternative export routes—from Russia to China and via the Caspian—add future flow capacity, even if some projects take up to a decade to complete. For Oil, the structural message is simple: unless a major disruption permanently removes several million barrels per day from the market, the system is configured for ample supply, not scarcity.

Risk Balance For Oil, WTI CL=F And Brent BZ=F: What Could Flip The Script Or Deepen The Slide

The upside and downside risks are clearly defined. On the upside, a major and sustained geopolitical shock that physically removes 1–2 million bpd or more for months, a sharp positive surprise on global demand led by Asia and a tightening U.S. inventory trajectory, or a decisive and deeper-than-expected OPEC+ cut with high compliance could shift CL=F and BZ=F back into a higher range. On the downside, confirmation of persistent global stock builds through early 2026, accelerating peace momentum in Ukraine that markets interpret as future Russian volume normalization, and further downgrades to demand growth in Europe and Asia would validate current bearish expectations and open room for WTI to test mid-50s or lower. Given current pricing around $57 for WTI, $61 for Brent, the projected 2026 surplus, soft refined-product balance, and technical rejection of the $60 and $64 bands, the market’s stance remains that crude is a sell on strength until fundamentals or geopolitics deliver a genuinely new shock to the system.

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