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Oil Prices Plummet: Global Glut Fears Erupt
13 Dec
Summary
- Crude oil prices hit a seven-week low amid global glut concerns.
- Gasoline futures reached a 4.75-year low due to oversupply fears.
- Geopolitical risks in Venezuela and Russia offer some support.
Crude oil and gasoline futures experienced significant declines today, with WTI crude oil reaching a seven-week low and RBOB gasoline hitting a 4.75-year low. Persistent concerns over a global oil surplus are driving down prices. The current weakness in stock markets has also diminished optimism about the economic outlook, further suppressing energy demand.
Despite the bearish sentiment, geopolitical developments are offering some upward pressure on crude prices. The seizure of a sanctioned oil tanker off the coast of Venezuela by US forces could complicate the nation's oil exports. Additionally, threats from Russian President Putin regarding attacks on ships from nations aiding Ukraine introduce further geopolitical risk.
The global oil market faces the prospect of a "super glut" in the coming year, according to commodities trader Trafigura. This outlook, coupled with a falling crack spread and Saudi Aramco's price cuts for Asian customers, points to weakening demand and continued downward pressure on oil prices.
