US crude oil production reached a record 13.6 million barrels per day in May 2026, according to EIA data, driven by continued productivity gains in the Permian Basin. The basin alone is producing over 6.5 mb/d, exceeding the total output of every OPEC member except Saudi Arabia. Technological improvements in horizontal drilling and completion design are extracting more oil per rig than ever before.
The surge in US output is part of a broader non-OPEC supply wave. Guyana's Stabroek block is ramping toward 800,000 b/d, with ExxonMobil targeting 1.3 mb/d by 2027. Brazil's pre-salt fields are adding 200,000-300,000 b/d annually. These projects were sanctioned years ago and are coming online regardless of current price signals.
On the demand side, global oil demand growth is moderating. The IEA projects 2026 demand growth of approximately 0.86 mb/d, down from 1.2 mb/d in 2025, as China's economic rebalancing reduces incremental oil consumption. The combination of robust supply growth and moderating demand creates a clear surplus trajectory for 2026-2027.
The supply-demand imbalance creates a persistent bearish backdrop for medium-term prices. EIA and IEA base cases project significant inventory builds through 2026, which should gradually erode the current geopolitical risk premium embedded in prompt WTI prices near $90/bbl. The question is not whether prices will fall, but when and how quickly the contango structure will develop.
The record US production and non-OPEC supply wave create a clear downward trajectory for medium-term WTI prices. Cover H2 2026 requirements via deferred contracts rather than prompt purchases. The contango structure — where deferred prices are lower than prompt — should be exploited. Avoid locking in annual contracts at current spot levels above $85/bbl.