Oil prices have fallen to a minimum: what are the reasons?
16 December 10:12
US benchmark crude oil fell to its lowest level since February 2021. The market is reacting to the possible end of the war in Ukraine and conflicting macroeconomic signals from China.
This is reported by "Komersant Ukrainian" with reference to Bloomberg.
West Texas Intermediate (WTI) crude oil futures ended below $57 per barrel. The drop occurred amid low liquidity ahead of the Christmas and New Year holidays and amid instability in the stock markets.
Negotiations on Ukraine are the first reason for the price drop
Additional pressure on the quotes was exerted by reports of intensified negotiations between the US and Ukraine, Bloomberg writes.
“According to media reports, the US side has offered Kyiv more significant security guarantees as part of its efforts to reach a peace deal. At the same time, the market remains concerned that these initiatives may be accompanied by pressure on Ukraine over territorial issues,” the publication writes.
Analysts note that the potential end of the war could lead to an easing of restrictions on Russian oil supplies, which would reduce the risks of disruptions in the global market, which is already characterized by oversupply.
China is one of the reasons for the decline in black gold prices
Negative sentiment was also supported by signals of a slowdown in China, one of the world’s key oil consumers. They outweighed data on the growth in oil demand and refining activity in China in November.
According to experts, the oil market may end the year with lower prices, as supply exceeds demand in both 2025 and 2026. Concerns about an oil glut are also being reported in the Middle East markets. In particular, according to Bridgeton Research Group, trend-oriented investors maintain short positions in both Brent and WTI.
“At the same time, the market is also affected by geopolitical risks. Ukraine has stepped up its attacks on Russian energy infrastructure in the Caspian region, and investors are also assessing the risks to Black Sea shipping and possible US actions against Venezuela after the detention of a supertanker last week,” Bloomberg reported.
