DTN Oil Update
Oil Up for 2nd Day as 2025 Heads to Close Down 18%
SECAUCUS, N.J. (DTN) -- Oil futures rallied for a second straight session on Wednesday while heading for an average annual loss of 18% in a year defined by geopolitical risks as much as record U.S. production and a global supply glut.
With the steepest yearly loss since the coronavirus outbreak of 2020, crude markets will begin 2026 with little certainty over demand while the Russia-Ukraine war drags and the Middle East sees new tensions from Saudi bombings in Yemen and U.S. threats of strikes against Iran. The Trump administration is also expected to continue its pressure campaign against Venezuela, including seizures of tankers laden with oil from the Latin American country.
P[L1] D[0x0] M[300x250] OOP[F] ADUNIT[] T[]
"Practically little will change as we head into the new year with both the supply risks and glut we're in not diminishing in any way," observed John Kilduff, partner at New York energy hedge fund Again Capital.
The bearish factors in oil include OPEC's abandoning of its "price-over-volume" strategy this year as the producer group attempted to reclaim lost market share from non-OPEC competitors. This led to a layered unwinding of production cuts that added nearly 2.9 million bpd back into the global market.
The U.S. added to the oversupply situation with a production that reached a record high 13.9 million bpd. Brazil and Guyana also saw peaks in output during the year.
Economic weakness in major economies and the rapid adoption of electric vehicles in China, meanwhile, tempered consumption growth, with worldwide usage of oil increasing by only 0.8 million barrels per day (bpd) versus supply growth at 3 million bpd. The combination of relentless production and weak demand led the International Energy Agency to forecast an oil glut of almost 4 million bpd for 2026.
NYMEX WTI crude for February delivery was up by $0.56, or 1%, at $58.51. ICE Brent's front-month contract rose by $0.55, or nearly 1%, to $61.88 barrel (bbl). Both benchmarks were poised to close the year down by about 18% each, after their average loss of 21% in 2020.
Downstream, the front-month RBOB contract edged up by $0.0064 to $1.7394 gallon. ULSD bucked the uptrend, with the front-month futures contract falling by $0.0034 to $2.1471 gallon.
The U.S. Dollar Index rose by 0.05 points to stand at 98.01 against a basket of foreign currencies.