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(Refiles to fix typographical error in headline) By Georgina McCartney HOUSTON (Reuters) -Oil prices settled at their lowest since early May on Monday as investors weighed a potential global glut, with U.S.-China trade tensions adding to concerns about an economic slowdown and weaker energy demand. Brent crude futures settled down 28 cents, or 0.46%, at $61.01 a barrel. U.S. West Texas Intermediate futures settled down 2 cents, or 0.03%, to $57.52. Both benchmarks fell more than $1 earlier in the session, and both closed at their weakest levels since early May.  Oil traders' concerns have shifted from under-supply to over-supply, the futures contract structure of the global benchmark Brent showed. The six-month spreads for Brent and U.S. crude futures both show contracts for earlier loading are trading below those for later loading, a structure known as contango, which encourages traders to pay for storing oil so it can be sold at higher prices when supplies are expected to have shrunk in the future.  The Brent contango, which emerged on Thursday for the first time since a brief appearance in May, was trading at its widest since December 2023. The U.S. crude futures contango emerged on Friday for the first time since January 2024.  "These glut fears are now descending onto the market, particularly looking forward into 2026. We will start to see floating storage pick up and inland tanks get filled," said John Kilduff, partner with Again Capital.  "This is a real bearish narrative that we have not seen in some time," Kilduff added.  Both benchmarks declined more than 2% last week, marking their third consecutive weekly decline, partly due to the International Energy Agency's outlook for a growing supply glut in 2026.  Both futures contracts spent much of the year in the opposite structure, called backwardation, where prompt prices trade at a premium to later supply. That reflects a perception of tight near-term supply and solid demand. US-CHINA TRADE WAR The two top oil consumers, the United States and China, have renewed their trade war, imposing additional port fees on ships carrying cargo between them – tit-for-tat moves that could disrupt global freight flows. Last week, the head of the World Trade Organization said she had urged the United States and China to de-escalate trade tensions, warning that a decoupling by the world's two largest economies could reduce global economic output by 7% over the longer term. Curbing some of oil's losses on Monday was news that a lobbying group whose board includes U.S. firms such as Oracle, Amazon.com and Exxon Mobil is urging President Donald Trump's administration to immediately suspend a rule it says halted billions of dollars' worth of U.S. exports and will prompt China and other countries to drop U.S. firms from their supply chains. Uncertainty remains over what may happen with Russian oil supply, with Trump saying again on Sunday that the United States would maintain "massive" tariffs on India unless it stops buying Russian oil. On the supply side, U.S. energy firms last week added rigs for the first time in three weeks, energy services firm Baker Hughes said. "Near term, the market is sitting in a classic shoulder-season mix of refinery maintenance, softer product cracks and a watchful eye on weekly U.S. inventory data," analysts at energy consulting firm Gelber and Associates said in a note.  Adding further pressure, U.S. crude oil stockpiles were expected to have risen last week, a preliminary Reuters poll on Monday showed. Five analysts polled by Reuters ahead of weekly inventory data estimated on average that crude inventories rose by about 1.5 million barrels in the week to October 17. (Additional reporting by Shadia Nasralla, Ahmad Ghaddar in London, Yuka Obayashi in Tokyo and Colleen Howe in Beijing; Editing by Emelia Sithole-Matarise, Will Dunham and Louise Heavens)

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By Michael S. Derby (Reuters) -Some Wall Street analysts now believe the Federal Reserve will pull the plug on its long-running effort to shrink its balance sheet at the end of the month. These central bank watchers believe the ground has shifted for quantitative tightening, or QT, due to mounting money market friction, which could threaten the Fed’s control over the interest rate target it uses to achieve its inflation and employment goals. Stopping the withdrawal of liquidity by QT at the October 28-29 Federal Open Market Committee meeting would help ensure the technical aspects of monetary policy continue to run well, these analysts reckon. “We expect the FOMC to end its securities runoffs at this month’s meeting,” analysts at Wrightson ICAP said in a note over the weekend. While they’re skeptical genuine liquidity tightness has emerged in money markets, some of the recent turbulence in short-term lending “is clearly a sufficient warning sign to justify moving on to the next phase of the Fed’s normalization plan.” Evercore ISI forecasters wrote on Monday “we think the Fed will now signal the end of QT at its October meeting with a view to wrapping up before year-end pressures, although the actual end may come a month or two after the announcement.” Jefferies analysts told clients “we expect that the Fed will completely cease QT at the next meeting at the end of the month,” although the Fed is likely to allow mortgage bonds, which have been very slow to come off its books due to challenging housing market conditions, to expire at the current pace. The shift in sentiment follows market moves last week that saw some key short-term borrowing rates rise as some financial firms unexpectedly tapped the Fed’s Standing Repo Facility, which exists to provide fast cash loans collateralized by bond holdings.  Also signaling market friction: A rise in repo borrowing costs and the Secured Overnight Financing Rate, as the federal funds rate, the Fed’s main interest rate target, drifted higher in its current range of between 4% and 4.25%.  That all happened as Fed Chair Jerome Powell in remarks on October 14, said QT might end “in coming months,” even as he echoed other Fed officials who have said recently there remains plenty of liquidity in the financial system. Fed Governor Christopher Waller, who spoke in New York on Thursday, said “we're about at that point” where the financial system has the right amount of liquidity, as measured by banking sector reserves. QT RIP The QT process is designed to remove liquidity from the financial system added during the COVID-19 pandemic. In a bid to provide stimulus and bond market stability the Fed aggressively bought Treasury and mortgage bonds to lower long-term interest rates. Those purchases, kicking off in large size in the spring of 2020, more than doubled total Fed holdings to $9 trillion by the summer of 2022. Since then the Fed has allowed a set amount of bonds to mature and not be replaced, taking holdings to the current level of $6.6 trillion. The Fed has said it seeks to leave enough liquidity in the system to allow for firm control over short-term interest rates and to allow for normal money market volatility. The challenge for the Fed is that it’s unclear how much liquidity it can remove before markets grow too volatile, so Wall Street has struggled to predict when QT would end. The recent chop in money markets is driven by a number of factors, Fed balance sheet policy included. “There are a number of reasons why this is the case, including some idiosyncratic factors related to tax payment dates, Treasury auction settlements, and increased bill issuance; the biggest factor is the result of the Fed's ongoing balance sheet normalization,” the Jefferies analysts wrote. Still, the challenge of getting a hold on the amount of money market liquidity that would meet the Fed criteria has kept alive views that QT has further to run, especially as bank reserve levels thus far have been stable and QT has thus far mainly extinguished excess liquidity parked in the Fed’s reverse repo facility. To that end, bank reserves have come down but have been fairly close to $3 trillion for some time.   Goldman Sachs forecasters said after Powell’s speech that “we now expect the FOMC to announce at its January meeting that runoff will end in February,” noting they had expected that announcement at the end of the first quarter. (Reporting by Michael S. Derby; Editing by Andrea Ricci)

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(Reuters) -Proxy firm Glass Lewis has recommended that Tesla shareholders vote against the proposed $1 trillion pay package for CEO Elon Musk, days after ISS also urged investors to reject what might be the largest-ever compensation plan awarded to a company chief. The Glass Lewis recommendation adds pressure to Tesla's board ahead of a closely watched shareholder meeting on November 6 and renews scrutiny of Musk's compensation after a Delaware court earlier voided his $56 billion pay package. Glass Lewis said the potential decrease in shareholder value and details of the proposed payment terms "warrant significant concern." The recommendations by Glass Lewis and ISS "attempt to override the mandate our shareholders delivered to Elon and ignore the staggering financial results delivered under Elon's leadership, elevating their rigid policies over shareholder value," Tesla said in a post on X. "Glass Lewis's one-size-fits-all checklists undermine shareholders' interests, including by opposing proposals designed to build long-term value at Tesla," the EV maker said. The two proxy advisory firms had last year also urged shareholders to reject the $56 billion pay package, calling the compensation excessive. Last month, Tesla's board proposed the compensation plan for Musk in what it described as the largest corporate pay package in history, setting ambitious performance targets and aiming to address his push for greater control over the company. However, the record pay plan could still hand him tens of billions of dollars even if he falls short of most of its ambitious targets, thanks to a structure that rewards partial achievement and soaring share prices. Glass Lewis has also opposed a vote on Tesla making an investment in Musk's artificial intelligence company, xAI. While the proxy adviser does not necessarily disagree with the investment, it says that such a "decision needs to be fully considered and ultimately decided by the board, not shareholders." The proxy adviser's guidance on the pay and investment is part of a wider set of voting recommendations issued on Monday. (Reporting by Juby Babu in Mexico City; Editing by Maju Samuel)

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