Crude Oil Tumbles as the Dollar Strengthens and Equities Fall

Core Viewpoint - Crude oil and gasoline prices have experienced a significant decline, influenced by a strong dollar and concerns over economic outlook and energy demand, despite geopolitical tensions supporting crude prices [2][4]. Group 1: Price Movements - January WTI crude oil closed down by $1.20 (-2.00%) and January RBOB gasoline closed down by $0.0360 (-1.96%) [1]. - Gasoline prices reached a 1.5-week low, indicating a notable drop in energy prices [2]. Group 2: Economic Influences - The strength of the dollar has negatively impacted energy prices, contributing to the decline in crude and gasoline prices [2]. - Weakness in the stock market has also affected confidence in the economic outlook and energy demand [2]. Group 3: Geopolitical Factors - Geopolitical risks, including threats from Russian President Putin regarding attacks on ships aiding Ukraine, are providing some support for crude prices [4]. - Recent attacks on Russian tankers in the Black Sea have heightened tensions in the region [4]. Group 4: Supply Dynamics - Saudi Aramco has reduced the price of its Arab Light crude oil for Asian customers by $0.30 per barrel for January delivery, the lowest since January 2021, indicating weakened energy demand [3]. - Russia's oil product shipments fell to 1.7 million barrels per day (bpd) in the first half of November, the lowest in over three years, due to ongoing conflicts and targeted attacks on Russian refineries [5]. - New sanctions from the US and EU on Russian oil companies and infrastructure have further curtailed Russian oil exports [5]. Group 5: OPEC+ Actions - OPEC+ has decided to maintain its plans to pause production increases during the first quarter of 2026, following a previous announcement to raise production by 137,000 bpd in December [6]. - The International Energy Agency (IEA) has forecasted a record global oil surplus of 4.0 million bpd for 2026, influencing OPEC+'s production strategies [6].