"Oil prices fell below $60 per barrel before rallying back above that key level recently due to a combination of oversupply and weak demand. Global oil inventories are rising, putting downward pressure on prices. At the same time, both OPEC+ and U.S. production were increasing amid relatively stable global oil demand, as OPEC+ sought to regain market share. Some banks had expected West Texas Intermediate (WTI) oil prices to be below $60 for the remainder of 2025."
"OPEC+ recently announced plans to unwind its production cuts, with the increases being lower than those initially proposed. The U.S. Energy Information Administration had said it expects the price of crude oil to fall below the current $60 per barrel by the end of the year and average near $50 per barrel through 2026, as more supply is added to an already well-supplied market. This was the status quo until this weekend, when OPEC+ announced it would pause its production increases after December, citing concerns about a global oil glut."
"In addition, while concerns about global economic growth and potential recession have weighed on demand expectations, some of those worries are fading. Earlier in the year, tariff-related uncertainty also contributed to price volatility, although some of those concerns have since disappeared. The combination of these factors has pushed prices to their lowest levels since 2020. This allows investors to start buying the mega-cap dividend-paying giants in the industry at a bargain price, especially after the OPEC+ production increase halt."
Oil prices dropped below $60 per barrel amid oversupply and weak demand, then briefly rallied above that level. Global inventories rose while OPEC+ and U.S. production increased as OPEC+ sought to regain market share. Forecasts from some banks and the U.S. Energy Information Administration anticipated prices under $60 and averaging near $50 through 2026 as additional supply entered the market. OPEC+ announced plans to unwind cuts and later paused production increases after December due to glut concerns. Fading recession and tariff worries eased some demand fears. Lower benchmarks created perceived buying opportunities in large integrated oil companies.
Read at 24/7 Wall St.
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