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Oil prices are bouncing back from oversold levels as more analysts are starting to question the oil surplus narrative, and on expectations that we could be closer to a U.S.–China or U.S.–India trade deal that could ignite demand for U.S. oil and liquefied natural gas. All the negativity about a major oil glut didn’t show up yesterday in the American Petroleum Institute report, which showed that crude oil inventories fell by 2.98 million barrels—keeping U.S. supplies below average for this time of year. At the same time, they reported a drop in gasoline inventories of 236,000 barrels and distillates of 974,000 barrels.

The skepticism that I have shared with you about this so-called oil glut is being shared by many other analysts in the industry and at the same time we are seeing the warnings about oil prices being too low to encourage investment to replace the natural decline in the weight of wells by Halliburton in their earnings call this week. Anas Alhajji, Eric Nuttall, Art Bermanare just a few that have called out the International Energy Agencies prediction of a massive oil glut and raise questions whether the IEA and others are getting the issue of record floating storage all wrong.

Eric Nuttall seemed to mock the floating storage glut by pointing out that the, “most anticipated oil supply glut in history”doesn’t seem to keep in mind that onshore inventories have fallen by 23 million barrels so far this month. I would also add that global Strategic Petroleum Reserves around the world have been depleted under the Biden Administration and are going to be replaced. Yesterday the Trump Administration announced a one million barrel buy for our SPR and that bounce should help US shale producers that are struggling to maintain output.

And honestly, the Trump Administration has a lot of catching up to do here. Under Biden, between 2021 and 2025, the U.S. released a whopping 180 million barrels from the Strategic Petroleum Reserve. Back in March 2022, the International Energy Agency’s 31 member countries (not counting the U.S. barrels) let 60 million barrels go from their own emergency reserves, and the U.S. chipped in another 30 million—so that’s 90 million barrels hitting the market right off the bat.

Then, in April 2022, there was another big coordinated release—IEA members put out 120 million barrels total, with the U.S. and other countries each contributing about 60 million barrels. That means, over six months, the IEA countries rolled out a combined 240 million barrels, which works out to more than a million barrels a day. All in all, the IEA countries together released about 182.7 million barrels in 2022 through these two major efforts. That’s roughly 9% of the emergency reserves they had at the time—a pretty significant chunk and more overshadows this growing perception of a massive oil glut

Besides, as Nuttall points out, that oil “on water” could simply reflect slower unloading, ships waiting for better prices, trade rerouting, or weather delays—not necessarily excess supply. Anas Alhajji, also reject the glut talk by saying that, “Analysts and journalists overlooked several facts. The amount of oil on water is smaller, and the impact on the oil market is significantly exaggerated.

Art Berman also says that more oil “on water” doesn’t mean a glut. It can mean stronger demand or shifting trade routes. Stop a pipeline, ship the same barrels by sea, and voilà—“oil on water” jumps with no real surplus. Bob McNally also points out that, “supply’s growing three times faster than demand,” misses the point. Oil isn’t a spreadsheet—it’s a living market where credit, inventories, and expectations move faster than barrels. Gluts on paper often vanish in practice.

Oil Price Daily points out that, “Oil in transit in unchartered territory, supported by longer sailing distances – favoring the big tankers Very Large Crude CarriersVLCC’s with capacity up to almost 2 million barrels of crude oil per voyage. So instead of paying to store oil on tankers in land, it’s likely that oil demand is being met by shipments rather than by local tanks.The market drew about 1.3 million barrels per day during 2021, and all tanker sizes remain active as we fix January and February barrels to meet demand. This hardly screams glut—it’s more like a well-oiled machine keeping up with global appetite.

Look at China: as of September, their crude surplus stands at 570,000 barrels per day, cut down sharply from August. Imports fell to eleven-and-a-half million barrels per day, the lowest since January, mostly because refiners slowed purchases after a price spike. But here’s the twist—China’s refiners processed even more oil, smoothing out price shocks and keeping the market balanced. Their average surplus for the year? 930,000 barrels per day. That’s not exactly a mountain of unused oil piling up; it’s a testament to just-in-time inventory management.

Given the just in time oil management may actually improve with artificial intelligence. It reminds me of the late 1990s early 2000s when computer technology was becoming more widespread and it really changed the dynamics of oil delivery. Now with artificial intelligence, it may even improve on time deliveries making it less imperative that we have to store commercial inventories at such a high rate

The Strategic Petroleum Reserve serves a different purpose, as it is maintained for emergency situations. These supplies may not always be immediately available, and if production cannot keep up, timing becomes less relevant.

So, rather than bracing for a historic surplus, maybe it’s time to ask: Is the oil market just adapting to new patterns, with demand still humming and logistics keeping pace? The numbers tell a nuanced story—and it’s far from bearish.

The other thing to keep in mind about this is OPEC spare production capacity is at the lowest level it’s been in years. Estimates show that OPEC spare production capacity is at about 4.0 million barrels a day and despite the concerns that OPEC’s production increases would flood the market with supply, OPEC has struggled to even meet their quota in recent months. OPEC produced36.06 million barrels per day (bpd), according to OPEC’s secondary source estimates in the October 2025,  slightly below the collective quota to around 36.2 million bpd.

So the moral of the story is be skeptical of the talk of this glut. Use the market weakness to put on your winter hedges and trade the charts for the swings that will be coming. Call Phil Flynn to open your account and learn more about hedges and swing trading at 888-264-5665. And as I said that compared to gold and silver even with their big correction, the oil and gas markets are probably one of the most undervalued commodities on the board right now.

Speaking of natural gas we had a very nice pop yesterday as the weather is starting to turn cold and we’re starting to get very optimistic about the demand side of the market. LNG exports continue to be nearer record and the market technically is looking like a bottom. John Moran of Moran Logistics is still skeptical as he’s very concerned that we’re still producing way too much. Natural gas prices surged yesterday as falling temperatures boost market optimism for higher demand. LNG exports are still flirting with record levels, and the technical charts? They’re screaming “bottom!” But check out these numbers! Coming off those bargain-basement prices, short-term natural gas surged 12.07% in just the past month. That’s thanks to tighter supply expectations, booming LNG shipments, and everyone gearing up for seasonal demand. Year-over-year, we’re up an eye-popping 50.26%—a huge rebound from last year’s slump, even though the Henry Hub spot price slipped to $2.80 per MMBtu on October 21 because the weather’s been mild (for now).

Yet the Fox Weather apis saying that colder weather is barreling in late October, and that’s pushing up forecasts for both power generation and residential heating. Sure, storage is still healthy, but it’s being tapped faster than anyone thought. With LNG exports rocketing near all-time highs, global networks are feeling the squeeze. In short, natural gas is having a moment.

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