Oil prices fall to 4-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 between April and December, as Saudi Arabia aims to regain market share [4][3] - The International Energy Agency forecasts an oil glut of 3.8 million barrels per day by 2026, despite OPEC's recent decision to maintain production rates [5] Group 3: Market Conditions - Crude tankers at sea are currently holding over 1 billion barrels, indicating difficulties for sellers in finding buyers [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]