Oil Achieves Steepest Annual Decline Since 2020

The losses were largely attributed to a chronic focus on global oversupply: File Image/Pixabay

Oil trading on Wednesday fell minimally as investors waffled between acknowledging supply disruption risks stemming from aggression against Venezuela by Washington, and data showing exceptionally strong economic growth in the U.S.

After it was learned that the U.S. economy grew at its fastest pace in two years in the third quarter, driven partly by a substantial increase in exports, West Texas Intermediate fell 3 cents to $58.29 per barrel.

Brent dipped 14 cents to $62.24 per barrel, with analysts noting that both it and WTI were expected to fall about 16 percent and 18 percent, respectively, for the year - the sharpest declines since the onset of the Covid pandemic in 2020 and driven by the supposition that global supply will exceed demand in the New Year.

Dennis Kissler, senior vice president of trading at BOK Financial, said, "Volatile holiday trading looks set to become the norm here, with the Venezuelan blockade a focal point heading into the holiday weekend."

Kissler added that, "While the blockade and sanctions are not decreasing world supplies, they may be delaying them, lending a bullish tilt to prices."

The U.S. seized Venezuelan tanker Skipper earlier this month and pursued two others, and as of Wednesday over a dozen loaded vessels were in Venezuela awaiting new directions.

Meanwhile, ocean-borne Russian crude was building up by 48 percent since the end of August, and Bloomberg stated that "The U.S. actions against Venezuela may be raising concerns among shippers and buyers of Russian barrels, who worry their cargoes could also be targeted."

In other oil news on Christmas Eve, the American Petroleum Institute estimated that U.S. crude inventories swelled by 2.4 million barrels in the week ending December 19; gasoline inventories rose by 1.1 million barrels and distillates also rose in the reporting period, gaining 700,000 barrels.