Energy Sector Slips as Oil Nears Fourth Monthly Loss
Brent crude hovers near $62 as OPEC+ is expected to hold production steady amid rising concerns of a global supply glut and weakening demand forecasts.
A persistent downturn in crude oil prices is casting a shadow over the energy sector, with Brent crude on track for its fourth consecutive monthly loss. The global benchmark settled near $62.38 a barrel in recent trading, pressured by mounting fears of a global supply surplus and a gloomier outlook for demand.
In response to the challenging market dynamics, the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, is widely expected to maintain its current production policies and pause planned output increases for the first quarter of 2026. This defensive posture highlights the cartel's concern that without continued discipline, the market could tip into a significant oversupply, further eroding prices.
The market is grappling with conflicting signals on future consumption. OPEC's own analysis has grown more cautious, with the group trimming its global oil demand growth forecasts for the fourth consecutive month, according to its latest monthly report. In contrast, the International Energy Agency (IEA) recently made minor upward revisions to its 2025 and 2026 growth forecasts, though not enough to dispel the broader market anxiety.
The price action tells a clear story of market sentiment. West Texas Intermediate (WTI), the U.S. benchmark, has also seen significant weakness, closing around $58.55 per barrel. The downward trend reflects not only concerns about demand from key economies but also robust production from non-OPEC+ countries, which adds to the potential for a structural surplus next year.
This bearish sentiment in the commodities market is weighing heavily on energy equities. Shares of industry bellwether Exxon Mobil Corp. (NYSE: XOM) traded around $115.92, well off its 52-week high of over $119. The integrated oil giant has reported a year-over-year decline in quarterly revenue, reflecting the tougher macro environment for the sector. The pressure is on producers to maintain capital discipline in the face of volatile prices and uncertain demand.
Analysts are watching the upcoming OPEC+ meetings closely for any deviation from the expected hold. The cartel faces a difficult balancing act: supporting prices through production cuts without ceding too much market share to competitors. Analysts at J.P. Morgan have warned that the global oil market may require significant production cuts to avert a steeper price slide, suggesting that Brent could fall sharply without sustained intervention.
As traders await the cartel's official decision, the energy market remains on edge. The tug-of-war between disciplined supply from OPEC+ and the headwinds of a potential global economic slowdown will continue to dictate the trajectory for oil prices and energy stocks into the new year.