Oil prices continue to fall amid fears of a possible supply glut

Oil extended losses to fall to the lowest level in five months amid fears of a possible supply glut, while gains in broader financial markets were ignored. The price of Brent crude for December delivery fell about 0.8% to $61.91, and West Texas Intermediate crude also declined to settle near $58 a barrel, the lowest level since May. Prices saw sharp swings throughout most of the trading session after losing around 7% over the past five sessions. The OPEC+ alliance has decided to increase supplies this year, at a time when the market sees fears of a possible oversupply, which has put pressure on prices. Stocks rallied after the Federal Reserve hinted at a new rate cut later this month. UBS analyst Giovanni Staunovo said: “Oil continues to be strongly affected by trade tensions and fluctuations in risk appetite, but with equity markets trading in a positive range, there is limited support.” Expectations of a record surplus in supplies The International Energy Agency has raised its estimates of a record surplus in supplies over the next year, while some major oil trading companies say the expected surplus has already begun to appear. Traders are expected to focus on the industry report on US oil inventories which is expected to be released later on Wednesday. The main real contracts for US crude also weakened to their lowest levels in about two months, in light of the escalation of the trade dispute between the United States and China and the sharp rise in shipping costs. Also read: US sanctions confuse the movement of oil and tankers change their course away from China. Resistance at the $60 level amid high political risks. Rebecca Babin, chief energy trader at the CIBC Private Wealth Group, said: “West Texas crude faces strong resistance around the $60 per barrel level, while news risks related to US-China tensions remain high.” The tariff war between Beijing and Washington, the world’s biggest oil consumer, escalated this week, although US Trade Representative Jameson Greer expected tensions to ease soon. Some market indicators also showed signs of weakness as the time spread between the two closest December WTI contracts turned into a “contango” situation, a structure in which spot offer prices are lower than futures prices for later delivery.