OIL.WTI loses 2.5% 📉

Oil prices in the US fell below $55 per barrel today, to their lowest levels since April 2021. This follows a break below the previous lows recorded on "Liberation Day," when Trump announced his tariff changes. WTI crude oil recorded its daily low of around $55.1, while Brent fell below $60 per barrel for the first time since May.

The pressure on prices stems from growing concerns about a record oversupply in 2026. The IEA estimates it at around 4 million barrels per day, while the EIA sees an average oversupply of around 2 million barrels per day. Although the forecasts differ, they suggest the largest oversupply since the pandemic, forcing aggressive discounts in oil prices. Admittedly, the EIA recently raised its forecast for the average price of Brent in 2026 to around USD 55 per barrel, but at the same time, the agency announced a thorough update of its supply, demand, and price forecasting models, the first such major change in 25 years, to be fully implemented by 2027. This shows that even among agencies focusing on the energy and oil markets, there are divided opinions on the future prospects for the commodity.

In addition, the market is discounting the scenario of peace in Ukraine, which could unlock greater exports of Russian oil and further increase the availability of the commodity. Negotiations on Kiev's renunciation of its NATO aspirations in exchange for firm security guarantees are fueling speculation about a potential agreement. Sentiment is also being negatively affected by weak data from China, where industrial production has fallen to a 15-month low and retail sales are growing at their slowest pace since December 2022, undermining the rationale for further large oil purchases by China in the coming months. At the same time, Venezuela is facing blocked shipments, growing price discounts, and pressure from customers to change spot contract terms following the recent seizure of a tanker carrying Venezuelan oil by the US, further complicating the supply picture. All these factors together have pushed oil to its lowest levels since 2021.

Source: xStation