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Oil Holds Losses as Investors Digest Growing Oversupply Evidence
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October 20, 2025
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3:55Now PlayingOil held losses after a third week of declines as traders took stock of mounting evidence that a long-anticipated surplus is finally starting to emerge.
West Texas Intermediate fell to trade near $57 a barrel as investors rolled over positions ahead of the November contract’s expiry this week, adding to choppy trading. Floating storage lifted to a fresh high as producer nations keep adding barrels and the tankers sail further for deliveries, among the most tangible signs yet that markets are oversupplied. Bloomberg's Mike McGlone reports.
Oil futures have tumbled more than 20% from their summer highs as the Organization of the Petroleum Exporting countries and its allies ramp up production, while major forecasters project a flood of supplies continuing into next year.
Even so, WTI has edged into oversold territory on the nine-day relative strength index for the first time since May, a possible indication that prices lurched lower too fast. It also suggests a reversal may be in the cards.
“Crude futures continue to trade on the defensive amid ideas a looming supply surplus is near,” said Dennis Kissler, senior vice president for trading at BOK Financial. Price support for WTI rests at around $56.15, though a close below $55 risks a further price slide, he added.
Geopollitical forces are also at play. Prices have been weighed down by limited progress toward a de-escalation of the war in Ukraine, a scenario that could push oil toward $50 a barrel, according to Citigroup Inc. President Donald Trump last week said he would hold a second meeting with Russia’s Vladimir Putin seeking to end the conflict, though previous talks have done little to stem the hostilities.
Meanwhile, China’s economy slowed for a second straight quarter, undermined by reduced consumer and company spending, though Beijing signaled its full-year growth goal of about 5% is still on track. The next round of talks between the world’s top economies and oil consumers is set for this week, with US President Donald Trump expressing optimism about a potential deal.
Other key market metrics are softening. The US benchmark’s December-January time spread for the first time since May flipped into contango, a bearish pricing pattern that’s characterized by nearer-term contracts trading at a discount to longer-dated ones. The spread between the two nearest December contracts flipped into a bearish contango structure in early October.
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