Oil prices slid sharply as surplus fears intensified, pushing Brent below $60 per barrel, though supply risks and falling US Crude inventories offered limited near-term support, ING's commodity experts Ewa Manthey and Warren Patterson note.

US Crude stocks fall sharply

"The Oil market sell-off accelerated yesterday. ICE Brent is settling 2.7% lower, breaking below US$60/bbl to its lowest level since February 2021. This pressure comes from a growing surplus outlook. Hopes for a Russia-Ukraine ceasefire will undoubtedly add to the downward pressure. As our Oil balance shows, the peak of the surplus is expected in the first quarter of 2026. However, with every quarter of next year in surplus, inventories should grow throughout 2026, putting further pressure on Oil prices."

"There are clear supply risks to our view. Russian risks are well telegraphed, but there are clear risks to the Venezuelan Oil supply. Oil prices have bounced higher in early-morning trading today (WTI up around 1.3% at the time of writing), after President Trump ordered a blockade of sanctioned Oil tankers entering and leaving Venezuela. This follows the US seizing an Oil tanker off the coast of Venezuela last week. Venezuela exported around 600k b/d of Oil in November. It’s likely that these volumes will fall given the latest developments. The bulk of this Oil is shipped to China."

"American Petroleum Institute (API) inventory numbers released overnight were also supportive of the market. US Crude Oil inventories are reported to have fallen by 9.3m barrels over the last week. Meanwhile, refined product inventory changes were more bearish, with gasoline and distillate fuel Oil stocks increasing by 4.8m barrels and 2.5m barrels, respectively."