DTN Oil Update
Oil at 7-Month Low on Ukraine Focus, Russian Crude Discount
SECAUCUS, N.J. (DTN) -- Oil futures sank to seven-month lows Tuesday, Dec. 16, over the growing likelihood of an imminent peace deal for Ukraine that could free sanctioned Russian crude onto an already overflowing global market.
A deepening discount for millions of Russian barrels trapped at sea due to sanctions against Moscow-based energy firms Rosneft and Lukoil further weighed on crude prices. Bloomberg reported that Russian exporters, on average, were receiving just over $40 bbl for cargoes shipped from the Baltic, Black Sea and the eastern port of Kozmino -- down 28% from three months ago.
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Global crude benchmarks WTI and Brent fell for a fourth straight session and to their lowest since May.
NYMEX WTI hung above key $55 bbl support, with futures slated for January delivery falling $0.88 to $55.79 after a seven-month low at $55.69, DTN data showed.
ICE Brent broke key $60 support, with the February shipment contract down $0.90 bbl to $59.66 bbl, after a seven-month bottom at $59.43.
The pressure cascaded downstream, with gasoline futures nearing a five-year low, while ULSD remained resilient at a two-month bottom -- helped by relatively tighter distillates supply.
The RBOB futures contract for January delivery slipped $0.0243 to $1.7080 gallon after tumbling to $1.7069, its lowest since February 2022.
January ULSD dipped $0.0203 to $2.1603 gallon, after a two-month low at $2.1519.
The global crude market is grappling with a glut widely characterized as the worst since the demand-decimating coronavirus pandemic of 2020, with forecasts suggesting it could worsen in 2026 to become the largest in modern history.
The implied oil surplus for 2025 is 2.3 million bpd, driven by both non-OPEC and OPEC+ output. For 2026, the glut has been forecast at just under 4 million bpd by the International Energy Agency.
Those projections compare against the 2020 pandemic-era surplus of 2.4 million bpd.