Oil Crashes Worst Since 2020!
Oil prices are heading for their deepest speculative decline since 2020, pressured by concerns about a large supply surplus that is expected to continue to cloud market sentiment until the start of the new year.
In recent trading, WTI (the US benchmark) was below $58 per barrel and could post its fifth consecutive monthly decline, while on a year-on-year basis it has already fallen nearly 20%. Brent for March contracts held above $61 per barrel.
The main pressure comes from a combination of bulging supply (from OPEC+ and other producers) and slowing global demand growth. Several forecasters—including the IEA—are predicting a glut next year, and even the typically more optimistic OPEC secretariat sees a mild surplus.
The market's immediate focus is on the OPEC+ video meeting on January 4. Several delegates have suggested that OPEC+ may remain on hold as signs of a surplus become clearer.
On the data side, the American Petroleum Institute (API) report showed US crude oil inventories rose by 1.7 million barrels last week—if confirmed by official data, this would be the largest increase since mid-November. The API also noted that gasoline and distillate (diesel) inventories also increased.
Beyond fundamental factors, the market is also monitoring geopolitical tensions: the United Arab Emirates is rumored to be withdrawing troops from Yemen amid tensions with Saudi Arabia; there are reports of disruptions to Venezuelan oil shipments and US President Donald Trump's claims of a secret attack; and the escalating dynamics in Russia-Ukraine negotiations. However, movement is also likely to be "quiet" due to the holidays, and many markets will be closed for New Year's.
Key points:
- Oil is headed for its deepest annual loss since 2020 due to the shadow of a supply surplus.
- WTI <$58 and nearly -20% year-to-date; Brent ~$61.
- Supply is rising from OPEC+ and rivals, while demand is slowing → price pressure.
- The OPEC+ meeting on January 4 is key; the market is assessing the possibility of a pause in supply increases.
- US oil stocks rose by 1.7 million barrels, according to the API (bearish if confirmed).
- Geopolitics (Yemen, Venezuela, Ukraine) remains a source of noise, but the underlying sentiment remains a surplus. (asd)
Source: Newsmaker.id
