Oil prices headed for the biggest annual drop since 2020 as war and OPEC+ production cuts failed to lift prices, with traders concerned that global crude supplies may still eclipse demand in the quarters to come.
West Texas Intermediate held above $72 a barrel, on course for weekly, monthly and quarterly losses. The US crude marker has declined by about 10% this year, while global benchmark Brent has retreated by about 9%. A broader gauge of commodities has dropped by a similar margin.
WTI ended lower on Thursday after official US data showed that while nationwide crude oil stockpiles shrank last week, holdings at the key Cushing, Oklahoma, storage hub expanded for the 11th week to hit the highest since August. US crude production has been running at a record clip.
Oil is capping a tumultuous year, with prices aided by the outbreak of the Israel-Hamas war, as well as speculation that the Federal Reserve is done with hiking interest rates as inflation wanes. Still, despite repeated cuts to supplies from the Organization of Petroleum Exporting Countries and its allies, rising production from nations outside the cartel, coupled with concerns about slowing demand growth, have combined to drive crude futures lower.
This month, traders have contended with spiking tensions in the Red Sea after a spate of vessel attacks staged by Houthi rebels in Yemen. Half of the container-ship fleet that regularly transits the key waterway are now avoiding the route, and crude tankers have also been diverted, lengthening voyages and boosting costs. – Bloomberg
