Oil Hits 5-Year Low, Ends 2025 Down 19% Amid Glut Risks


   
Barani Krishnan
DTN Refined Fuels Market Reporter

   SECAUCUS, NJ (DTN) -- Crude futures reversed a positive start to finish the 
final session of 2025 lower on Wednesday (12/31), ending the year with a 19% 
loss as massive oversupply overshadowed global risks.

   It was the market's most severe downturn since the 2020 pandemic as a murky 
2026 looms amid demand uncertainty.

   Prices buckled from the middle of the year after OPEC and its partners 
shifted focus toward defending market share, abandoning its previous policy of 
prioritizing high price floors over total output volume. The pivot triggered a 
phased return of roughly 2.9 million bpd to the global market, with the 
enlarged OPEC+ alliance meeting this weekend to review its decision to freeze 
output hikes in the first quarter of 2026.

   U.S. output further pressured the market, reaching a record 13.9 million 
bpd, alongside increasing production from Brazil and Guyana.

   Simultaneously, global consumption struggled as Chinese motorists 
transitioned rapidly to electric vehicles and major industrial economies from 
Japan to Germany faced stagnant growth throughout the second half.

   This imbalance left demand growing by a mere 800,000 bpd, while total global 
supply expanded by a robust 3 million bpd, according to the International 
Energy Agency.

   U.S. efforts to broker peace between Russia-Ukraine war saw little progress, 
while the Saudi-Yemen war flared anew. The Trump administration threatened 
strikes against Iran while keeping up pressure against Venezuela.

   "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," John Kilduff, 
partner at New York energy hedge fund Again Capital, told DTN.

   The U.S. Energy Information Administration's (EIA) report of a 1.9 million 
bbl crude draw for last week, after a 400,000-bbl build the prior week, did not 
help Wednesday's trading session.

   NYMEX WTI for February delivery settled at $57.42 bbl, down 0.9% on the day 
and 19% on the year. The ICE Brent contract for February settled at $60.85, 
lower by 0.8% for the session and 19% on the year.

   The two benchmarks' sharpest prior loss was in 2020 when they plunged 21% 
following the coronavirus outbreak which triggered a collapse in oil demand.

   In fuel futures, the front-month NYMEX RBOB settled at $1.715 gallon, down 
1% on the day and 15% year-over-year following EIA data showing that total 
motor gasoline inventories increased by 5.8 million last week, adding to the 
prior week's surplus of 2.9 million.

   Front-month ULSD closed at $2.1206, lower by 1.7% on the session and 9% on 
the year, after distillate stockpiles rose by 5 million bbl last week and 2.2 
million the week prior.

    

    

    




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