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(Bloomberg) — Oil headed for its deepest annual loss since the pandemic in 2020, with prices undermined by concerns about a punishing surplus that’s set to dominate market sentiment and trading into the new year.
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US benchmark West Texas Intermediate was below $58 a barrel, on track for a fifth monthly loss and down by almost 20% this year. Brent for March closed above $61. Traders’ near-term focus was on an upcoming OPEC+ meeting, a bearish US industry report, and a slew of geopolitical tensions.
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Crude has slumped this year as supplies swelled from OPEC+ and its rivals, while world demand growth slowed. Top forecasters including the International Energy Agency are predicting a huge glut next year, and even OPEC’s secretariat — usually more bullish than others — projects a modest surplus.
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OPEC+ members — scheduled to meet by video conference on Jan. 4. — are expected to stick with a plan to pause further supply hikes amid growing evidence of the surplus, according to three delegates.
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Ahead of that, the industry-backed American Petroleum Institute reported crude inventories increased 1.7 million barrels last week. That would be the biggest build since mid-November, if confirmed by official data later Wednesday. The API also saw bigger holdings of gasoline and distillates.
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Among geopolitical tensions, the United Arab Emirates said that it would withdraw forces from Yemen following a flare-up in tensions with Gulf ally Saudi Arabia over military operations in the conflict-hit country. Saudi Arabia and the UAE are both important members of OPEC.
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Elsewhere, traders are tracking a partial US blockade of crude shipments from Venezuela. President Donald Trump has revealed a covert US strike against what he said was a drug-trafficking facility, raising fresh questions about how far Washington is willing to go to pressure the regime of Nicolas Maduro.
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