Crude Prices Plunge on Demand Concerns Amid Mounting Oil Supplies

Core Insights - Crude oil and gasoline prices have reached 4.75-year lows due to concerns over global energy demand and expectations of an oil glut [2] - A decline in the S&P 500 to a 3-week low has dampened economic optimism, negatively impacting energy demand [2] - Potential geopolitical easing, particularly regarding a ceasefire in Ukraine, is expected to further pressure crude prices [4] Economic Indicators - The US unemployment rate increased by 0.1% to 4.6%, marking a 4-year high, indicating reduced energy demand [3] - The US S&P manufacturing PMI for December fell to 51.8, a 5-month low, below expectations [3] - The Eurozone S&P manufacturing PMI unexpectedly dropped to 49.2, indicating the steepest contraction in 8 months [3] Geopolitical Factors - Optimism regarding a potential end to the Ukraine war could lead to lifted sanctions on Russian energy exports, negatively affecting oil prices [4] - Increased geopolitical risks in Venezuela, following US interceptions of sanctioned oil tankers, may support crude prices by complicating Venezuela's oil exports [6] Market Dynamics - The crude crack spread has fallen to a 6-month low, discouraging refiners from purchasing crude oil for gasoline and distillate production [4] - Crude oil stored on stationary tankers rose by 5.1% week-over-week to 120.23 million barrels, indicating a potential oversupply [5]