Oil prices rebounded on Tuesday, rising modestly from the previous session’s five-month lows, as investors reassessed expectations of an impending glut and sought clarity on the trade dispute between the United States and China — the world’s two largest oil consumers.
Brent crude futures gained 31 cents, or 0.5%, to close at $61.32 a barrel, while U.S. West Texas Intermediate (WTI) crude futures for November delivery — which expired at Tuesday’s settlement — advanced 30 cents, or 0.5%, to $57.82 a barrel. Both benchmarks had tumbled to their lowest levels since early May on Monday amid record U.S. production levels and the Organization of the Petroleum Exporting Countries (OPEC) and its allies’ decision to maintain their planned supply hikes, raising expectations of an oversupplied market.
Analysts quoted by Reuters said that relatively low U.S. crude and distillate fuel inventories provided some support to prices.
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Low inventories are “helping counter some of the pressure on oil benchmarks,” Bjarne Schieldrop, chief commodities analyst at SEB, said.
The market has also been reacting to shifting geopolitical signals. The U.S.-China trade dispute — which has weighed heavily on global growth expectations — remains a key factor influencing oil demand outlooks. Still, both Washington and Beijing have recently signaled a willingness to ease tensions.
U.S. President Donald Trump, who is scheduled to meet Chinese President Xi Jinping in South Korea next week, said Monday he expects to reach a fair trade deal with his counterpart. The president struck a more optimistic tone after months of tariff escalations that have dampened trade and industrial activity worldwide.
Analysts Divided Over Market Direction
Despite Tuesday’s gains, traders remain cautious. The structure of both Brent and WTI futures curves has started to shift into a contango — a market condition where prices for near-term delivery are lower than for later months. This typically indicates that immediate supply is abundant, while demand is softening.
The degree of that contango, however, remains a subject of debate. The International Energy Agency (IEA) earlier this month projected that a surplus next year could steepen the futures curve into a “super contango,” reflecting significant oversupply. But that scenario has not yet materialized, according to UBS analyst Giovanni Staunovo.
“While supply concerns have increased in recent weeks again, we believe the oil market is oversupplied but not in a glut,” Staunovo wrote in a client note. “We expect oil prices to stabilize around current levels,” he added, cautioning that renewed trade tensions could still pressure prices downward.
A preliminary Reuters poll released Monday suggested that U.S. crude stockpiles likely rose last week — a sign that domestic output, which has reached record levels above 13 million barrels per day, continues to outpace refinery demand.
“The reality of stock builds appears to be finally here, and prices should head lower to put a deeper contango in the market,” said Scott Shelton, energy specialist at TP ICAP Group.
Adding a modest floor to prices, Bloomberg reported on Tuesday that the U.S. Department of Energy plans to purchase 1 million barrels of crude oil for the Strategic Petroleum Reserve (SPR). The planned acquisition marks the latest step in Washington’s effort to rebuild emergency inventories that were drawn down last year.
The Trade Tensions Factor
The outcome of next week’s meeting between Trump and Xi in South Korea could set the tone for oil markets heading into November. Analysts say a cooperative outcome could provide short-term relief to energy prices, while further escalation could deepen global demand concerns.
The U.S.-China trade rift has already slowed industrial activity across Asia and Europe. Economists estimate that trade-related uncertainty has shaved nearly half a percentage point off global GDP growth this year. With oil demand closely tied to manufacturing and transport activity, even marginal changes in trade outlooks could have outsized effects on prices.
While China has remained the world’s largest oil importer, its refiners have started to moderate purchases amid slower domestic demand and increased export restrictions on refined products. Meanwhile, the U.S. continues to flood global markets with shale oil, keeping downward pressure on global benchmarks.
Still, the combination of supply restraint by some OPEC members and ongoing geopolitical risks — including tensions in the Middle East and disruptions in Russian crude flows due to sanctions — could provide intermittent support to prices in the months ahead.
For now, the market remains in a balancing act between optimism over potential trade resolution and concerns of a global supply overhang.
The oil market is expected to remain range-bound until there’s clearer evidence of either a stronger economic recovery or significant supply cuts.
Brent and WTI futures have both lost roughly 12% from their mid-summer highs, and analysts expect continued volatility through the fourth quarter as the U.S. election campaign intensifies and global economic forecasts remain uncertain.
With inventories rising and refinery margins under pressure, traders and analysts alike agree that any durable rebound in prices will depend less on immediate supply shifts and more on whether global growth and energy consumption can regain momentum heading into 2026.
