Oil at 7-Mo Low on Ukraine Focus, Russian Crude Discount


   
Barani Krishnan
DTN Refined Fuels Market Reporter

   SECAUCUS, NJ (DTN) -- Oil futures sank to seven-month lows Tuesday (12/16) 
over the growing likelihood of an imminent peace deal for Ukraine that could 
free sanctioned Russian crude onto an already overflowing global market.

   A deepening discount for millions of Russian barrels trapped at sea due to 
sanctions against Moscow-based energy firms Rosneft and Lukoil further weighed 
on crude prices. Bloomberg reported that Russian exporters, on average, were 
receiving just over $40 bbl for cargoes shipped from the Baltic, Black Sea and 
the eastern port of Kozmino -- down 28% from three months ago.

   Global crude benchmarks WTI and Brent fell for a fourth straight session and 
to their lowest since May.

   NYMEX WTI hung above key $55 bbl support, with futures slated for January 
delivery falling $0.88 to $55.79 after a seven-month low at $55.69, DTN data 
showed.

   ICE Brent broke key $60 support, with the February shipment contract down 
$0.90 bbl to $59.66 bbl, after a seven-month bottom at $59.43.

   The pressure cascaded downstream, with gasoline futures nearing a five-year 
low, while ULSD remained resilient at a two-month bottom -- helped by 
relatively tighter distillates supply.

   The RBOB futures contract for January delivery slipped $0.0243 to $1.7080 
gallon after tumbling to $1.7069, its lowest since February 2022.

   January ULSD dipped $0.0203 to $2.1603 gallon, after a two-month low at 
$2.1519.

   The global crude market is grappling with a glut widely characterized as the 
worst since the demand-decimating coronavirus pandemic of 2020, with forecasts 
suggesting it could worsen in 2026 to become the largest in modern history.

   The implied oil surplus for 2025 is 2.3 million bpd, driven by both non-OPEC 
and OPEC+ output. For 2026, the glut has been forecast at just under 4 million 
bpd by the International Energy Agency.

   Those projections compare against the 2020 pandemic-era surplus of 2.4 
million bpd.




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