JPMorgan Chase' latest report estimates that the global oil market will return to a daily supply surplus of 1.1 million barrels in September, and this surplus will further expand to 1.4 million barrels in October, approaching the average surplus level of 1.3 million barrels per day by 2025.

The main factors driving the market towards excess include the recovery of exports from the Middle East, increased supply from Latin America, and the suppression of oil consumption due to high oil prices.

JPMorgan Chase estimates that the average daily oil exports from the Middle East have rebounded from a low of 9.8 million barrels in March to around 20.7 million barrels. Although they are still below pre-war levels, the recovery in supply has significantly improved the global supply and demand relationship.

At the same time, Latin American crude oil supply has increased by about 1.5 million barrels per day compared to a year ago, with the main increase coming from Brazil, Venezuela, Guyana, and Argentina. In October, global crude oil imports reached 44.9 million barrels per day, an increase of 1.3 million barrels per day compared to the same period last year.

Changes on the demand side are equally important. JPMorgan Chase estimates that due to high fuel prices and supply disruptions, global oil demand has decreased by about 3.3 million barrels per day since the conflict in the Middle East began. The rebound in supply, combined with shrinking consumption, has led to a surplus in the market once again.

The spot market also signals that supply is tending to become more abundant.

According to Bloomberg, the price differential between the most recent two delivery months of Dubai crude oil turned into a backwardation for the far-month contracts at the beginning of this week, with the November contract priced about $2 per barrel lower than the December contract. This is another sign of relatively ample near-term supply in the local market since July.

Meanwhile, in S&P Global Energy's trading window, the transaction prices of some contracts that can be converted into physical goods are close to the corresponding Dubai derivatives benchmarks, and the usual premiums have significantly narrowed.

However, a loosening of supply and demand is not yet sufficient to prove that the previously depleted oil inventories have been restored.

UBS, citing data from the International Energy Agency, pointed out that from February to September this year, global visible oil inventories decreased by just over 500 million barrels, a significant portion of which came from strategic reserves.

JPMorgan Chase's estimates of supply surpluses in September and October reflect the recent difference between oil production and consumption; UBS' disclosure of declining inventories covers the period of several months prior to that. Even if supply has recently exceeded demand, this does not confirm that global available inventories have returned to pre-conflict levels.

There are also constraints in the transportation sector. UBS pointed out that attacks on ships, fluctuations in transportation volumes, transshipment between ships, and additional safety requirements continue to limit the effective capacity of oil tankers.

Sparta Commodities Senior oil market analyst Joan Wu ( June Goh ) stated that, unlike at the end of June when a large amount of stranded crude oil was rapidly transported out of the Gulf, the current supply return is more gradual.

Oil price trends also reflect changes in market expectations.

UBS data shows that Brent and WTI crude oil prices rose by 13.6% and 15.2% respectively in October, before falling back in early November. The bank believes that expectations surrounding the diplomatic progress between the United States and Iran have reduced some of the geopolitical risk premiums, but the price decline does not directly prove that physical supply has fully recovered.

UBS still expects the price of Brent crude oil to be $110 per barrel by the end of the year, and to fall to $95, $90, and $85 in March, June, and September 2027 respectively.

This forecast depends on the Middle East conflict, the diplomatic process between the United States and Iran, as well as the speed of recovery in production, transportation in the Gulf region, and global demand.

The core change in the current oil market is that the short-term supply-demand balance has begun to improve, but large-scale inventory depletion and transportation constraints still exist. Whether the subsequent supply surplus can continue to be converted into inventory replenishment will be an important basis for judging oil price trends and supply risks.