Crude oil prices began the week on a cautious footing, holding broadly steady as traders weighed OPEC’s latest policy shift against persistent worries about excess supply and softening global demand. West Texas Intermediate (WTI) futures hovered around USD 61 per barrel, marking a muted start to trading as investors assessed the competing pressures shaping the outlook for 2026.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies opted to pause planned production increases for the first quarter of 2026, signalling restraint after months of price weakness. The group nonetheless approved a modest output rise of 137,000 barrels per day for December, a symbolic move intended to demonstrate unity while avoiding the risk of flooding the market. The decision, viewed as a delicate balance between protecting revenue and maintaining market stability, helped limit further downside in prices after several volatile weeks.
Still, sentiment across the oil market remains fragile. Inventories are rising in several key regions, and US crude production has climbed to a record 13.8 million barrels per day, reflecting the sector’s resilience despite softer prices. Analysts note that these output levels, combined with subdued global refinery runs, have pushed global stockpiles higher — reviving concerns of an oversupplied market as early as the first quarter of next year.
On the demand side, data from China’s manufacturing PMI showed a renewed contraction, reinforcing doubts about the strength of industrial activity in the world’s largest oil importer. The slowdown in Chinese consumption, coupled with lacklustre demand growth in Europe and parts of Asia, continues to weigh on sentiment and limit the scope for any sustained price recovery.
Geopolitical factors, however, could still provide a floor for prices. The United States’ latest sanctions on Russian oil producers Rosneft and Lukoil, alongside reports of strikes targeting energy infrastructure in Eastern Europe, have heightened concerns over potential supply disruptions. These developments, while not yet translating into significant physical shortages, underscore the market’s vulnerability to geopolitical shocks.
Looking ahead, traders will closely monitor OPEC+’s compliance with its production limits and the trajectory of US shale output, both of which will determine whether the market can avoid a deeper price slide. With forecasts pointing to a global surplus emerging in early 2026, analysts expect crude to remain rangebound in the near term — sensitive to policy shifts, geopolitical flashpoints, and the evolving macroeconomic backdrop.
For now, oil markets appear trapped between competing forces: OPEC’s cautious discipline on one side, and relentless supply growth and faltering demand on the other.
