Vi e w p o i n t | 28 Jan 2026 15:25:03 ET │ 12 pages Oil Monitor Why are oil prices so strong, despite a supposed global oversupply and production returning from Kazakhstan and the US? CITI'S TAKE Oil prices can stay more elevated than many had expected, despite markets starting the year anticipating large oversupply. Recent events cannot fully explain the price strength: Brent is ~$68/bbl at the time of writing, far from the ~$50/bbl price that a 2-mb/d oversupplied market could imply. We had long expecte ...

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].

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]

Core Insights - Crude oil prices have fallen to levels not seen since early 2021 due to a supply glut and progress in peace talks regarding the Russia-Ukraine conflict [1][7] Price Movements - Brent crude futures dropped by 2.2% to below $59.30, while West Texas Intermediate (WTI) crude fell by 2.4% to below $55.50, marking the lowest prices since February 2021 [2] - Dubai crude oil and US Gulf Coast barrels have entered contango, indicating increased downward pressure on the oil market [3] Market Dynamics - Crack spreads have tightened as prices for crude derivatives like jet fuel and gasoline have decreased, impacting overall pricing [4] - Both Brent and WTI crude are projected to experience yearly losses exceeding 20% due to oversupply, with OPEC+ increasing production significantly [5] Future Projections - Analysts from JPMorgan Chase and Goldman Sachs predict Brent prices could fall into the $50s by 2026, with potential drops into the $40s or $30s if OPEC+ does not cut production [6]