Oil prices fall to four-year low below $55 as supply glut shows up

Core Viewpoint - Crude oil prices have fallen to their lowest levels since early 2021 due to a significant supply glut and progress in peace talks regarding the Russia-Ukraine conflict [1][2]. Group 1: Price Movements - Brent crude futures dropped over 2.8% to below $58.86, while West Texas Intermediate (WTI) futures fell by 3.1% to below $55 [1]. - Both Brent and WTI are projected to experience yearly losses exceeding 20% as the market faces an "extraordinary oversupply" [2][3]. Group 2: Supply Dynamics - OPEC+ has increased production significantly, adding 2.9 million barrels per day from April to December, as Saudi Arabia aims to regain market share [4]. - The International Energy Agency forecasts that the oil glut could reach 3.8 million barrels per day by 2026, despite OPEC's recent decision to maintain production rates [5]. Group 3: Market Conditions - Crude tankers are currently holding over 1 billion barrels at sea, indicating difficulties in finding buyers for the oil [5]. - The market has entered a contango state, where future prices are higher than current spot prices, reflecting increased storage and financing costs [6]. Group 4: Refined Products Impact - The price pressure is also affecting refined products, with crack spreads tightening as prices for derivatives like jet fuel, gasoline, and diesel have decreased [7].