MSCI’s regional equities gauge dropped 0.1%, extending its losses to a third consecutive day. That’s after the S&P 500 also fell for a third day Tuesday, while the Nasdaq 100 added 0.3%. Tesla Inc. shares declined about 1% in extended trading after the company’s sales in California were poised to be suspended for 30 days.Meanwhile, West Texas Intermediate crude oil rose more than 1% after President Donald Trump said he was ordering a “total and complete blockade of all sanctioned oil tankers” going into an ...

West Texas Intermediate crude oil fell below $55 for the first time since February 2021 on signs that supply is outpacing demand, while progress in Ukraine peace talks could eventually lead to a deal that may allow more Russian supply in the market. US crude futures slid as much as 3.2%. Brent, the global benchmark, dropped as much as 3%, after earlier slipping below $60 for the first time since May. Most Read from Bloomberg Signs of weakness are proliferating across the supply side of the oil market, ...

Core Viewpoint - Wall Street's top investment banks predict challenging years for the oil industry in 2026 and 2027 following a nearly 20% decline in oil prices in 2023 [1] Price Forecasts - JPMorgan's commodities team forecasts Brent crude oil to fall to $58 per barrel in 2026, with West Texas Intermediate (WTI) trading $4 below this level; prices are expected to decline by another $1 per barrel in 2027 [2] - Goldman Sachs predicts Brent and WTI prices at $56 and $52 per barrel respectively for the next year, with expectations of recovery to $80 and $76 per barrel by 2028, assuming oversupply does not persist [3][4] Supply and Demand Dynamics - The oil market is characterized by oversupply, with global supply continuing to rise despite robust demand; this trend is expected to persist into the next year [5] - OPEC+ has increased output by more than 2 million barrels per day since April, while US shale production is projected to reach record highs in December [6] - Heavy stockpiling by China absorbed much of the excess supply in the first half of 2025, supporting prices [6] Market Conditions - Demand from the Middle East remains stable, and Indian refiners are increasing purchases of Urals crude from Russia; however, over 1 billion barrels are currently stored in tankers globally, marking the highest level since 2023 [7] - The International Energy Agency anticipates a supply glut in 2026, predicting an overhang of 4 million barrels per day [7]

Core Insights - Oil prices are experiencing a three-day decline as investors evaluate the effects of Western sanctions on major Russian crude producers and mixed estimates of US inventory changes [1][4]. Group 1: Market Dynamics - Brent crude is trading above $64 per barrel, while West Texas Intermediate is near $60 [2]. - The market is assessing the long-term impact of additional sanctions, which will depend on the actual volume of barrels removed from supply [4]. - Oil is on track for a third consecutive monthly decline, influenced by expectations of a global surplus as OPEC+ plans to increase production [5]. Group 2: Geopolitical Factors - The US plans to enforce stringent new sanctions against Russia to pressure President Putin into negotiations regarding the Ukraine conflict [2]. - Indian state-owned refiners are evaluating their ability to continue purchasing discounted Russian oil under the new sanctions, with Indian Oil Corp. stating it will maintain purchases as long as it complies with international sanctions [3]. Group 3: Inventory Reports - A US industry report indicated a 4-million-barrel decrease in nationwide crude holdings, alongside reductions in gasoline and distillates [6]. - However, there was an increase in inventories at the key hub in Cushing, Oklahoma, with official figures expected to be released later [6].

Market Overview - The S&P 500 index has experienced a decline after peaking on February 19, 2025, despite a 1.2% increase in the first two months of the year [1] Energy Sector Insights - Energy prices have decreased over the past year, with West Texas Intermediate crude oil down 14.3%, presenting an opportunity for investors to consider energy stocks [2] - The current market conditions are favorable for patient investors seeking passive income through energy stocks [2] Company Analysis: Occidental Petroleum - Occidental Petroleum's stock has declined by 22.7%, yet the company achieved a record in U.S. oil production in 2024, bolstered by strong performance in various basins [4][5] - The company has improved its financial position by repaying $4.5 billion in near-term debt ahead of schedule [5] - With a stronger balance sheet and portfolio, Occidental Petroleum is well-positioned to navigate the downturn in energy prices [6] Company Analysis: ConocoPhillips - ConocoPhillips has seen a stock decline of 19.2% but remains an attractive high-yield stock with a price-to-operating cash flow ratio of 5.2, below its five-year average of 6.2 [7] - The company completed a $22.5 billion acquisition of Marathon Oil, adding over 2 billion barrels of low-cost resources and expected synergies exceeding $1 billion in 2025 [8] - ConocoPhillips increased its reserves to 7.8 billion barrels of oil equivalent (BOE) by the end of 2024, up from 6.8 billion BOE in 2023 [9] - The company maintains a conservative approach to shareholder returns, committing to return at least 30% of operating cash flow, with 45% returned in 2024 [10] Company Analysis: Devon Energy - Devon Energy's stock has dropped by 23.2%, but the company reported record oil production of 398,000 barrels per day in Q4 2024, contributing to a total of 737,000 BOE daily [11][12] - The company generated $3 billion in free cash flow in 2024, allowing for $2 billion in shareholder returns and $472 million in debt repayment [13] - Devon Energy has shifted focus towards share buybacks rather than substantial variable dividends, while still planning to return up to 70% of free cash flow to shareholders in the future [14][15] Investment Strategy - The decline in energy prices presents a cyclical opportunity for investors to acquire leading energy stocks at discounted prices [16] - Conservative investors may consider Occidental Petroleum and ConocoPhillips, while those seeking growth potential should look at Devon Energy [17]