DTN Oil Update
Gasoline Futures at 2021 Low as Glut Sinks Oil Markets
SECAUCUS, N.J. (DTN) -- Gasoline futures hit a bottom not seen in almost five years and crude prices hovered near seven-month lows Tuesday, Dec. 16, on concerns about oversupply, heightened by the likelihood of a peace deal for Ukraine that could free sanctioned Russian crude onto an already bloated market.
The RBOB gasoline contract for January delivery fell $0.0514, or 3%, to close at $1.6809 gallon, after tumbling to $1.6795, its lowest since February 2021. Gasoline futures have already lost almost 8% in just the first two weeks of December, heading for their sharpest monthly decline since the 9% tumble in August.
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ULSD remained relatively resilient, hitting just a two-month bottom due to the tighter supply situation in distillates. The January ULSD contract dipped $0.0520 to settle at $2.1286 gallon, after a two-month low at $2.1255.
Oil markets are dealing with an intense oversupply fueled by rising output from both OPEC+ and non-OPEC producers.
The surplus for 2025 is estimated at 2.3 million bpd and projections from the International Energy Agency indicate the glut will grow to nearly 4 million bpd in 2026. If realized, that volume would exceed the previous modern record of 2.4 million bpd set during the 2020 pandemic.
NYMEX WTI hung above $55 bbl, after briefly breaking that key support. WTI for January delivery settled down $1.55, or 2.7%, at $55.27 bbl, registering a seven-month low at $55.58 bbl.
ICE Brent broke key $60 support, with the February shipment contract closing down $1.64, or 2.7%, at $58.92 bbl, after a seven-month bottom at $58.72.
WTI is down 5% so far for December while Brent shows a 6% drop on the month.
Crude futures tumbled with renewed force at the start of the week after progress reported in Ukrainian peace talks.
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.
