Oil settles lower amid supply glut concerns

Oil drilling rigs

Oil prices closed lower today, Oct. 20, as investors assessed the potential for a global supply glut amid rising trade tensions between the US and China and growing fears of an economic slowdown that could weaken energy demand.

Brent crude futures for December delivery declined 0.46%, or 28 cents, to $61.01 a barrel. WTI crude futures fell slightly, or 2 cents, to $57.52 a barrel at the close of trading.

According to estimates published by Reuters today, the structure of Brent crude futures contracts shows the market shifting from concerns about supply shortages to fears of a supply glut.

Prices entered a structure known as contango on Oct. 17, where short-term contracts trade at lower prices than longer-term contracts, encouraging traders to store oil and sell it later at higher levels.

Both benchmark crudes—Brent and WTI—fell more than 2% last week, their third consecutive weekly decline, after the International Energy Agency forecast a significant supply surplus through 2026.

These developments come amid renewed trade tensions between the US and China, after each country imposed additional tariffs on mutual shipping, moves that could disrupt global trade.

Meanwhile, uncertainty remains over Russian supplies, with US President Donald Trump reiterating his warning on Oct. 19 that his country would maintain "massive tariffs" against India unless it halted its purchases of Russian oil.