Oil prices slip on concerns over a supply glut

Oil prices fell by nearly 2% on Monday, pressured by worries over a global glut as U.S.-China trade tensions added to concerns about an economic slowdown and weaker energy demand. Brent crude futures were down $1.06, or 1.7%, at $60.23 a barrel, while U.S. West Texas Intermediate futures fell $1.03, or 1.8%, to $56.51. Oil traders’ concerns have shifted from under-supply to over-supply, the futures contract structure of the global benchmark Brent showed. The six-month spread for Brent shows contracts for earlier loading are trading below those for later loading, a structure known as contango, which encourages traders to pay for storing oil so it can be sold at higher prices when supplies are expected to have shrunk. The Brent contango, which emerged on Thursday for the first time since a brief appearance in May, has deepened to minus 56 cents, its biggest since late 2023.
Both benchmarks declined more than 2% last week, marking their third consecutive weekly decline, partly due to the International Energy Agency’s outlook for a growing supply glut in 2026. Last week, the head of the World Trade Organization said she had urged the United States and China to de-escalate trade tensions, warning that a decoupling by the world’s two largest economies could reduce global economic output by 7% over the longer term. The two top oil consumers have recently renewed their trade war, imposing additional port fees on ships carrying cargo between them – tit-for-tat moves that could disrupt global freight flows.
Uncertainty remains over what may happen with Russian oil supply, with U.S. President Donald Trump warning again on Sunday that Washington would maintain “massive” tariffs on India unless it stopped buying Russian oil. On the supply side, U.S. energy firms last week added rigs for the first time in three weeks, energy services firm Baker Hughes said. Reuters