Oil price forecast: WTI extends gains as EIA trims surplus outlook
WTI crude rises as EIA trims surplus forecast, but demand concerns persist
Oil prices extended gains on Wednesday after the U.S. Energy Information Administration (EIA) reduced its global oil surplus projections for 2025 and 2026. The EIA now expects a surplus of 100,000 barrels per day (b/d) in 2025, significantly lower than its previous 500,000 b/d estimate.
The 2026 surplus forecast was also halved from 1 million b/d to 500,000 b/d, reflecting ongoing supply constraints due to sanctions and geopolitical tensions.
The International Energy Agency (IEA) joined the EIA in lowering its oil market projections, citing expected declines in Iranian and Venezuelan crude output. Meanwhile, U.S. crude oil inventories increased by 4.2 million barrels, above market expectations of 2 million barrels, according to the American Petroleum Institute (API). However, gasoline stockpiles fell by 4.6 million barrels, indicating strong domestic fuel demand, which helped support oil prices.
USOIL price dynamics (Feb 2025 - Mar 2025) Source: TradingView.
WTI crude extends rally above $67
West Texas Intermediate (WTI) rose over 2% to $67.70 per barrel, extending its two-day rally. The gains were driven by a weaker U.S. dollar, easing inflation, and stronger gasoline demand in the U.S. Despite this, WTI remains well below its mid-January highs due to concerns over U.S. tariffs, OPEC+ output increases, and slowing Chinese demand.
Adding to market uncertainty, OPEC+ production is rising, with Kazakhstan exceeding its quota, which could limit further price gains. Meanwhile, Canada has announced $20.8 billion in counter-tariffs on U.S. goods in response to new import duties on steel and aluminum imposed by the Biden administration.
Market outlook: Geopolitical risks and supply adjustments
Investors remain cautious amid tariff-related economic risks, with U.S. stock prices declining and concerns growing over a potential economic slowdown. Additionally, geopolitical tensions persist after Houthi rebels threatened to target Israeli vessels in major global trade routes, adding uncertainty to the global oil supply chain.
As previously discussed, oil prices remain volatile, with a combination of economic uncertainty, production adjustments, and geopolitical tensions shaping the market outlook. Traders will closely watch OPEC+ production trends, U.S. economic indicators, and inflation data for further price direction.
