Fall nearly 20% this year! International oil prices may see worst annual performance since the pandemic began, with supply glut casting a shadow over the market in the new year.

Due to continued concerns about oversupply in the market, international oil prices are heading towards the most severe annual decline since the outbreak of the epidemic in 2020. This bearish factor not only dominates the current market sentiment, but will also exert pressure on the trading trend for the new year. On Tuesday, the price of US WTI crude oil futures fell below $58 per barrel, marking the fifth consecutive month of decline, with a year-to-date decline approaching 20%. The closing price of Brent crude oil futures for delivery in March next year stood at $61 per barrel. Traders' recent focus is on the upcoming OPEC+ meeting, a bearish industry report from the United States, and several geopolitical tensions. Since the beginning of this year, OPEC+ and its competitors have continued to increase supply, coupled with a slowdown in global crude oil demand, leading to a sharp drop in international oil prices. Mainstream institutions, including the International Energy Agency (IEA), predict that there will be a significant oversupply in the oil market next year; even the traditionally optimistic OPEC Secretariat expects a slightly oversupplied market. According to three OPEC+ representatives, the organization is scheduled to hold a video conference on January 4th, and given the increasingly clear signs of oversupply, member countries are highly likely to maintain the established policy of halting further production increases. Ahead of the meeting, the American Petroleum Institute (API) released data showing that US crude oil inventories increased by 1.7 million barrels last week. If this data is officially confirmed later this Wednesday, it will be the largest weekly increase since mid-November. At the same time, API data also showed simultaneous increases in gasoline and distillate oil inventories. On the geopolitical front, the United Arab Emirates announced the withdrawal of troops from Yemen. Previously, the UAE and its Gulf ally Saudi Arabia had tensions due to military operations in conflict areas in Yemen. Both Saudi Arabia and the UAE are core member countries of OPEC. In addition, traders are closely watching the US partial blockade of oil exports from Venezuela. US President Trump revealed that the US carried out a secret military strike on a drug-related facility, sparking speculation about the extent to which the US government will pressure the Maduro regime. Efforts led by the US to push for a ceasefire between Russia and Ukraine have also attracted attention. Russian president's press secretary Peskov stated on Tuesday that Russia will "firmly" adjust its negotiating position after the alleged attack on the Russian presidential residence. Ukrainian President Zelensky refuted Russia's allegations. Market trading sentiments were light on Wednesday, with most traders taking a holiday break. Most global financial markets, including the oil market, will be closed on Thursday for New Year's Day.