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Oil Steadies Near Two-Month Low as IEA Warns of Record Glut

(Bloomberg) — Oil steadied near a two-month low after the International Energy Agency said the market is on track for record oversupply next year.

Brent (BZ=F) traded below $66 a barrel, after closing at its lowest since June 5 on Wednesday, while West Texas Intermediate (CL=F) was around $63.

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Gloomy predictions from both the IEA and the US government this week come as supplies from both within and outside OPEC+ are expected to rise into the fourth quarter. Brent’s nearest timespread — a guage of market health — is trading at its weakest level since May.

Against that backdrop, traders are monitoring the lead-up to Friday’s summit between the US and Russian presidents, given that it may result in an easing or tightening of Washington’s sanctions on the OPEC+ member. Donald Trump warned he would impose “very severe consequences” if Vladimir Putin didn’t agree to a ceasefire, following a call with European leaders.

Oil has lost more than 10% this year as the Organization of the Petroleum Exporting Countries and its partners complete the reversal of output curbs started in 2023, though price moves have been limited in recent days as trading activity eases over the summer months in the northern hemisphere.

“We estimate Brent prices could land in the low $60s if there is progress toward a US-Russia deal,” Citigroup analysts including Anthony Yuen wrote, adding that the most likely outcome of the meeting will “favor the downside.”

—With assistance from Charlie Zhu and Sarah Chen.