Oil prices fall under pressure from rising US inventories and forecasts of an oil surplus in 2026

According to the EIA's weekly report released on Wednesday, US crude oil inventories rose by 3.04 million barrels between August 2 and 8 to a 2-month high, although they remain 5.1% below the 5-year seasonal average.

The US Environmental Protection Agency (EIA) on Tuesday raised its forecast for a global oil surplus in 2025 from 1.1 million barrels per day to 1.7 million barrels per day, and expects a global oil surplus of 1.5 million barrels per day in 2026.

The International Energy Agency (IEA) on Wednesday released a report predicting a record global oil surplus of 2.96 million barrels per day in 2026 due to low demand and increased supply.

Against this background, October Brent crude futures fell another 0.8% yesterday to $65.6/barrel, losing 10.5% in two weeks.

The market is awaiting the outcome of the August 15 meeting between Trump and Putin in Alaska, which could lead to a ceasefire between Russia and Ukraine and the easing of sanctions against Russia, which would lead to increased supplies. But if no agreement is reached, Trump has promised to tighten sanctions against buyers of Russian oil.

Low oil prices continue to put pressure on the prices of corn and oilseeds used to make biofuels, so a further decline in oil prices will negatively affect grain prices and American farmers, as well as US oil producers, where the cost of fracking oil production is much higher than in the Middle East.