Oil Price Forecast: Oil Slide as Surplus Fears Replace War Premium

WTI (CL=F) and Brent (BZ=F) lose altitude as surplus story replaces war premium

WTI (CL=F) is pinned around $62–$63 a barrel, after failing to hold the push through the $65–$66 band earlier this week. Brent (BZ=F) is trading near $67–$68, slipping from recent highs and lining up a second weekly decline as the market shifts from pricing escalation risk to pricing surplus.

Price snapshot and range map: WTI stuck at $62, Brent mid-range near $67

On the US benchmark side, WTI has been oscillating around $62.3–$62.9, down roughly 0.9% on the day in the latest leg and sitting almost exactly on the 200-day moving average. The same $62 area has acted as support and resistance several times, turning it into the pivot that decides whether the December recovery from about $55 remains intact or not. A clean break below $61–$62 exposes the $60 handle and then the deeper $58–$60 congestion zone that capped prices earlier in the winter. On the upside, every attempt to build above $65–$66 has failed, marking that band as the first real ceiling for CL=F.
Brent is trading just above its own 200-day average, hovering around $67.3–$67.6. That leaves it right in the middle of a broader $65–$70 range: structural support around $65 with the 50-day average nearby, and heavy resistance near $70 where sellers stepped in repeatedly. Until either $65 or $70 breaks decisively, BZ=F is in a sideways regime with a mild downside bias as momentum fades.

Fundamentals: from scarcity narrative to 2026 oversupply math

The fundamental tone has flipped. The International Energy Agency now projects oil demand in 2026 growing by only about 850,000 barrels per day after previously seeing roughly 930,000 bpd, while supply is expected to increase by about 2.4 million bpd to around 108.6 million bpd. That implies a structural surplus, not a shortage. In a separate warning, the IEA outlines a possible glut above 3.7 million bpd in 2026, the kind of imbalance that historically crushes any sustained rally and forces producers to re-cut output or accept much lower prices.
This oversupply message landed on a market that had already seen a 3% one-day drop after the IEA’s latest report. The reaction tells you exactly where positioning sits: the bull case was leaning on geopolitics and temporary disruptions, while the bear case has hard volume math behind it – and the math just got heavier.

OPEC+ and 2026 supply: Kazakhstan outages today, more barrels tomorrow

OPEC’s own numbers are more constructive for prices in the near term but don’t overturn the medium-term surplus story. The group kept its demand growth expectations unchanged at about 1.38 million bpd for this year and 1.34 million bpd for 2027, and reported that its production fell by roughly 439,000 bpd last month, driven largely by disruptions in Kazakhstan.
At the same time, OPEC+ insiders are already floating the idea of resuming output hikes from April. The bloc meets on 1 March, and the fact that a step-up in production is on the table while WTI trades in the low $60s shows how confident they are in the surplus narrative. If OPEC+ adds barrels into a market where the IEA is already flagging a multi-million-barrel glut for 2026, any rally above $65–$70 is immediately suspect.

U.S. supply and inventories: EIA data undercut the bull case

U.S. data is reinforcing the idea that supply is not the problem. The latest Energy Information Administration release showed crude stocks jumping by about 8.53 million barrels while U.S. production climbed nearly 500,000 bpd. Those are not the numbers you see in a tight market.
Traders initially shrugged off those releases while they were still focused on Middle East headlines. That has changed. Once fears of immediate U.S.–Iran escalation cooled and it became clear Washington is happy to stretch nuclear talks rather than rush into conflict, the “war premium” started bleeding out of CL=F and BZ=F, leaving the EIA’s inventory build and higher U.S. output front and center again.

Geopolitics: U.S.–Iran negotiations cap upside instead of driving panic

Earlier in the winter, every hint of tension around Iran and the Strait of Hormuz gave crude a jolt. Now, the market is digesting reports that Washington wants more time to negotiate rather than escalate. Trump’s messaging that any deal discussion could drag out another month further reduces the perceived probability of a near-term supply shock.
Without a credible, immediate threat to flows from the Gulf, geopolitics has flipped from upside driver to upside cap. As long as Iran headlines are about “talks” rather than “strikes” or “closures,” they justify a modest risk premium, not $10–$15 per barrel of extra pricing.

Technical structure in WTI (CL=F): 200-day average and $61–$62 as line in the sand

On the WTI chart, the 200-day exponential moving average is glued to the $62 handle, and price is sitting right on top of it. That zone coincides with the prior breakout area between $61 and $62 that launched the latest push to $66.
Below the surface, trend tools are starting to wobble. A Parabolic SAR reference around $61.3 and a Supertrend signal near $59.0 still frame the December move from roughly $55 to the mid-$60s as an up-phase, but that structure is now being stress-tested. A daily close under $61 would flip the narrative from “pullback within an uptrend” to “failed breakout,” unlocking $58–$60 and potentially the full retrace back toward $55 if the IEA surplus story accelerates liquidations.
On the topside, $65–$66 remains the first serious wall. It’s where trend followers took profit, range traders stepped in to fade the move, and the macro tape turned against bulls. Until CL=F can sustain closes above $66, any bounce is just noise inside a deteriorating range.

Technical structure in Brent (BZ=F): neutral in the middle of $65–$70

Brent’s picture is similar but slightly firmer. Price is hovering just above the 200-day average and just below the 50-day, effectively sandwiched in the middle of the $65–$70 corridor.
Support at $65 has been defended repeatedly and only a clean break below that level would signal that the surplus narrative is finally overwhelming the lingering geopolitical bid. On the upside, $70 has become the psychological and technical cap; every approach has attracted selling from desks that view 2026 oversupply as incompatible with a sustainable price north of $70 unless OPEC+ cuts deeper than planned.
As long as BZ=F stays between $65 and $70, the market is sending one message: there is no conviction in a breakout either way, and traders are content to sell strength and buy dips while waiting for more concrete policy or supply shocks.

Sentiment: oversupply fears replacing geopolitical adrenaline

Positioning is now being rebuilt around oversupply, not war risk. The IEA’s projection of a record glut above 3.7 million bpd in 2026 is being quoted across sell-side notes, and the narrative has shifted to “who blinks first” on production policy.
Risk assets more broadly are wobbling, which reduces the enthusiasm to use crude as a directional macro bet. When equities look vulnerable and inflation is easing, crude loses part of its appeal as a hedge and reverts back to being a pure supply-demand instrument. In that environment, inventory builds of 8+ million barrels and production gains of half a million bpd matter far more than headlines about diplomatic statements.

Olive oil’s boom-bust cycle is a warning sign for energy bulls

The olive oil market in Europe is a live case study of how quickly a scarcity premium can collapse once supply normalizes. Consumer prices in the EU jumped a cumulative 78% between 2022 and 2024 on the back of extreme droughts and poor harvests, especially in Spain, which accounts for more than 65% of EU output. Production dropped from 2.27 million tonnes in 2021/22 to just 1.39 million tonnes in 2022/23 – a 39% collapse – before recovering to about 1.55 million tonnes in 2023/24.
Once projections for 2024/25 moved back toward roughly 2.11 million tonnes, prices reversed sharply. Across the EU, retail olive oil prices fell around 23% in 2025. Spain saw a 38.9% drop, Greece 29.2%, Portugal 24%, after being the main beneficiaries of the earlier spike. At the same time, high prices had already knocked demand lower, amplifying the downside as supply recovered.
The parallel with crude is straightforward: if the IEA’s 2026 surplus path plays out and demand growth stays under 1 million bpd while supply rises by 2.4 million bpd or more, the “scarcity story” that supported CL=F and BZ=F through the winter can unwind quickly. High prices trigger demand discipline and substitution; once volume comes back, the retracement accelerates.

Balancing OPEC’s discipline against IEA’s surplus: who is mis-pricing 2026?

OPEC’s steady demand growth call of 1.3–1.4 million bpd and its current production restraint argue for a tighter market than the IEA projects. The bloc has already shown willingness to let outages in Kazakhstan and other members tighten balances, and could always cancel or scale back any April output hike if prices slide faster than desired.
The IEA, by contrast, is explicitly telling the market to prepare for a world where supply in 2026 reaches roughly 108.6 million bpd while demand growth slows, leaving structural slack. U.S. shale, Brazil, Guyana, and other non-OPEC producers are on the front foot, and sanctions leakage has kept more Russian and Venezuelan barrels on water than many expected.
Right now price action is siding with the IEA, not with the most optimistic OPEC scenarios. The failure of CL=F to hold above $65–$66 after a run from $55, and the inability of BZ=F to clear $70, both signal that desks are treating OPEC’s stance as a floor mechanism, not as a license to bid crude into the $80s while a large surplus is on the horizon.

Trading stance on WTI (CL=F) and Brent (BZ=F): short-term bias and rating

With WTI stuck on the 200-day average around $62 and the key $61–$62 band under pressure, the reward-to-risk profile favors a cautious, downside-leaning stance rather than chasing rebounds. The fundamental tape – IEA surplus projections, rising U.S. inventories, higher U.S. output, and the possibility of OPEC+ hikes from April – all line up against a sustained push above $65–$66 in the near term.
Brent’s position in the middle of the $65–$70 corridor is slightly stronger but still capped by the same oversupply story. As long as BZ=F fails to clear $70 on closing bases, every approach to that level invites selling.
On the current numbers, the rational stance is:
For WTI crude (CL=F), treat the market as bearish / Sell-biased while it trades below $65, with $61–$62 as the immediate decision zone and $58–$60 as the realistic downside if that floor breaks.
For Brent (BZ=F), view the tape as a range-bound Hold, with opportunistic shorts into $70 and defensive buying only near $65 if – and only if – OPEC+ signals restraint instead of fresh supply.

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