Oil prices fall more than $2/bbl as OPEC says 2026 supply to match demand

By Erwin Seba

HOUSTON (Reuters) -Oil prices fell more than $2 a barrel on Wednesday, weighed down by an OPEC report saying global oil supply will match demand in 2026, marking a further shift from its earlier projections of a supply deficit. 

Brent crude futures settled at $62.71 a barrel, down $2.45, or 3.76% after gaining 1.7% on Tuesday. U.S. West Texas Intermediate crude finished at $58.49 a barrel, down $2.55, or 4.18%, after climbing 1.5% in the previous session.

The Organization of the Petroleum Exporting Countries noted that world oil supply would match demand next year due to the wider OPEC+ group's production increases. Previously, it had projected a supply deficit in 2026.

"The prospect that the market is in balance is definitely what drove down prices," said Phil Flynn, senior analyst with Price Futures Group. "The market wants to believe it's balanced. I think the market took OPEC more seriously than IEA."

The International Energy Agency forecast in its annual World Energy Outlook that oil and gas demand could continue to grow until 2050. That was a departure from the IEA's previous expectation that global oil demand would peak this decade, as the international body moved away from a forecasting method based on climate pledges.

John Kilduff, partner at Again Capital, said the OPEC outlook comes as some crude sellers cannot find buyers.

"There are cargoes going begging," Kilduff said. "The very front of the market is forming a new price curve. There's just a general sense of weakness in the U.S. economy."

Analysts have previously highlighted that crude oversupply is curbing price gains. OPEC+ agreed this month to a pause in increasing its output in the first quarter of next year, after having unwound its cuts to production since August this year.

US GOVERNMENT REOPENING

The reopening of the U.S. government could boost consumer confidence and economic activity, spurring demand for crude oil, IG analyst Tony Sycamore wrote in a note.

The U.S. Republican-controlled House of Representatives is set to vote later on Wednesday on a bill, already signed off by the Senate, that would restore funding to government agencies through January 30.

The U.S. Energy Information Administration will release its outlook on Thursday.

(Reporting by Erwin Seba in Houston, Seher Dareen and Enes Tunagur in London, Colleen Howe in BeijingEditing by Jane Merriman, Hugh Lawson, Rod Nickel and David Gregorio)