CDN NEWS | 
US NEWS 
By Grant Smith
Evidence of a long-awaited supply overhang on global crude markets is becoming more tangible.
This year’s long-anticipated oil surplus has taken so long to show itself that traders were starting to doubt it would ever arrive. The wait seems to be ending.
While global supply has been exceeding demand at a brisk clip since January — as a result of increased output from both OPEC+ and its American rivals — the surplus was largely disappearing into storage tanks in China.
Now, evidence of the overhang is becoming more tangible.
The volume of oil aboard tankers — whether in transit or static — has climbed to well over 1 billion barrels, the highest since the 2020 pandemic triggered a vast pile-up at sea.
Source: ICE, Bloomberg
The premium on futures contracts — referred to as its “time-spread” — for delivery in early 2026 has dissipated, turning into a discount known as contango that typically suggests easy availability of cargoes. If that contango deepens, traders will look to put more barrels away into storage.
Meanwhile, leading forecasters like the International Energy Agency and the US Energy Information Administration point to an ever-larger glut ahead.
On Tuesday, the latest monthly report from the Paris-based IEA indicated that supply could exceed demand by over 4 million barrels a day in the first quarter of next year. Brent futures fell below $62 a barrel as tariff fears dealt an extra blow.
Whether the actual surplus reaches the dizzying levels implied on paper remains unclear.
China appears to possess considerable appetite to fill strategic reserves, Russian flows look vulnerable to international sanctions and the OPEC+ alliance could decide to reverse its strategy of pursuing market share. ConocoPhillips Chief Executive Officer Ryan Lance said on Tuesday that the market is still tighter than perceived.
But even if the scale of the excess is still in question, doubts over the reality of it are melting away.
–Grant Smith, Bloomberg News
Share This:
