Oil prices fell sharply on Wednesday after OPEC said it now expects the global market to be balanced in 2026, abandoning its earlier deficit forecast as non-OPEC production rises and inventories recover. The revision, detailed in the group’s Monthly Oil Market Report, triggered a new round of selling, with Brent futures down 3.67% to $62.77 a barrel and WTI off 4.1% at $58.55 by 1:11 p.m. ET.
OPEC’s analysis points to faster supply growth from the United States, Brazil, and Guyana, projecting non-OPEC liquids output to increase by about 1.3 million barrels per day next year. Global oil demand is forecast to rise 1.6 million bpd to 106.2 million bpd, steady from last month but no longer enough to tighten balances. The change eliminates the shortfall OPEC had anticipated in October and implies comfortable supply coverage through mid-decade.
The report said OECD commercial inventories have moved back toward their five-year averages, while refining margins in Asia and Europe narrowed for a second consecutive month. OPEC attributed the softer tone to “ample spare capacity, healthy upstream investment, and stronger crude exports from the Americas,” all of which signal a more stable supply picture after two years of constraint.
Market reaction was immediate. Traders said the latest revision confirms that supply is overtaking earlier demand assumptions, especially as the International Energy Agency’s updated data also point to slower consumption growth. Crude futures are sliding as funds cut long positions, adding to downward pressure already visible earlier in the week when prices had begun to retreat amid weaker sentiment and softer refinery runs.
OPEC+ production policy remains steady for now. Voluntary output cuts by Saudi Arabia, Iraq, and other members will extend into early 2026, though the report highlights “ample spare capacity” if prices continue to decline. Broader fundamentals, it said, remain supported by expanding refining capacity in Asia and steady investment across the Americas.
By Charles Kennedy for Oilprice.com
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