Oil prices are slipping again, and the question hanging over traders' heads is whether this is just another bout of market jitters or the start of something uglier.
Brent crude fell to $61.12 per barrel on December 12, down 0.26% from the previous day. WTI wasn't much better, dropping 0.28% on Friday. Gasoline futures hit a 4.75-year low. Nothing screams confidence quite like multi-year lows.
When crude drops and gasoline hits multi-year lows, the market isn't whispering doubt—it's shouting it.
The broader picture looks worse. Brent is down 17.95% year-over-year and 3% over the past month alone.
ICE Brent averaged $68.80 from January through November 2025, down over $11 from 2024. WTI has been bouncing around the high $50s, occasionally breaking $60 but never staying there long. December entered what some analysts called a “high-stakes period,” and so far, the stakes are trending downward.
The culprits are familiar. A stronger dollar made energy more expensive for foreign buyers. Stock market weakness dampened the economic outlook, raising doubts about demand. But the real elephant in the room is oversupply.
Global commodities trader Trafigura warned of a “super glut” in 2026, and forecasters are taking that seriously. Brent is now expected to average $55 per barrel in Q1 2026, with full-year 2026 forecasts sliding to $62 amid oversupply concerns.
Supply dynamics aren't helping either. The EIA forecasts a slight decrease in U.S. crude production in 2026, but a new wave of global supply is still coming online. Demand remains sluggish compared to the incoming barrels. The crack spread fell to a 2.25-month low, pressuring refiners and adding another layer of gloom.
Related commodities aren't faring much better. Natural gas is down 11.47% over the past month. Gasoline is off 16.74% yearly. Propane and methanol are also sliding.
November was boring after geopolitical bets fizzled out. December was supposed to bring catalysts. Instead, it's brought more weakness. Traders managing positions across multiple currency-denominated oil contracts are facing heightened price fluctuations that complicate hedging strategies and amplify portfolio risk.
Whether this is temporary noise or a warning sign depends on whether oversupply fears turn into reality. Right now, the market is betting they will. Cross-border oil transactions increasingly face settlement risk as payment timing mismatches between currencies create exposure to counterparty defaults. Meanwhile, energy traders are increasingly turning to FX swaps to manage currency exposure as dollar strength compounds the headwinds facing oil markets.
