BAF NEWS

Market Context: Oil Prices Decline

Oil prices fell on November 19 as traders digested fresh stockpile data. Brent hovered near $64.6 a barrel, while WTI traded around $60.5, according to Reuters. “Oil prices fell on Wednesday as an industry report showing crude and fuel inventories rose,” the outlet reported.

The price slide followed Asian-hours trading marked by caution. Earlier Russia-related risk premia faded as the session progressed. As a result, oversupply signals took center stage.

Global Market Risk-Off Sentiment

Broader markets turned risk-off around November 18, pressuring commodities. U.S. stocks fell, with the S&P 500 down 0.8%, the Dow off 1.1%, and the Nasdaq lower by 1.2%, according to AP News. Bloomberg added that “oil steadied as risk-averse sentiment pervaded global markets,” underscoring the caution.

Asia echoed the tone. Asian shares retreated ahead of key U.S. data and Nvidia earnings, Nasdaq reported. Consequently, the cautious mood spilled over into energy.

U.S. Inventory Builds Signal Oversupply

Industry data signaled rising U.S. supplies. The American Petroleum Institute reported crude inventories rose by about 4.45 million barrels for the week ended November 14. Gasoline increased roughly 1.55 million barrels, and distillates rose about 577,000 barrels, Reuters said.

The builds reinforced the view that supply is outpacing demand. Consequently, traders marked prices lower to reflect slack fundamentals. Analysts also warned that recurring builds often cap rallies.

Russian Oil Supply and Sanctions Impact

Near-term supply fears eased after a key Russian outlet restarted. “Russia’s Novorossiysk port resumed oil loadings on Sunday after a two-day suspension,” Reuters reported. Exports from Novorossiysk and the nearby CPC terminal amount to about 2.2 million barrels per day, or roughly 2% of global supply, the agency added.

However, sanctions continue to reshape flows. Bloomberg noted that “US sanctions on Russia have upended some crude flows.” Additionally, the U.S. Treasury said sanctions are squeezing Moscow’s oil revenue, according to Reuters. Therefore, traders expect episodic volatility even as near-term disruptions ebb.

Surplus Expectations and Analyst Forecasts

Against this backdrop, surplus expectations loom large. Goldman Sachs sees prices falling through 2026 as supply growth outpaces demand. “Oil prices are expected to decline through 2026, Goldman Sachs said,” Reuters reported.

The bank projects a surplus near 2 million barrels per day. The IEA flags a potential surplus up to 4.09 million barrels per day by 2026, Reuters also noted. Furthermore, OPEC+ has increased output since April, while non-OPEC supply from the U.S. and Brazil adds to the glut.

Balancing Supply Risks and Market Sentiment

Traders now weigh sanctions-related risks against a softening macro backdrop. Risk aversion across equities has reduced appetite for cyclicals, including energy. Moreover, fading hopes for rapid policy easing have not helped sentiment, Saxo noted.

Even so, supply shocks can still spark brief rallies. Yet surplus expectations and steady U.S. builds constrain follow-through. Consequently, price recoveries remain fragile and short-lived, according to available reports.

In the near term, positioning likely stays cautious. Inventories, macro sentiment, and Russian flow dynamics dominate the dashboard. For now, oversupply signals continue to anchor crude under pressure.