At long last, market fundamentals appear to be catching up to crude, defying worldwide turmoil that typically would trigger an oil spike. Surging U.S. production and a still uneven global recovery have tamed demand and suppressd a rally that in June saw Brent and West Texas Intermediate skyrocket to their highest levels of 2014. Both benchmarks have done a 180-degree turn since then, with WTI languishing near its weakest since February and Brent hunkered at 13-month lows.
The reasons behind the sharp turnabout were highlighted this week by the International Energy Agency. The monitor cited surging supply from both the United States—now the second-largest non-OPEC oil producer—and Saudi Arabia helping to boost global supply to 93 million barrels per day last month. That helped offset outages from other oil producers such as Libya, Colombia and Yemen, the IEA said.