WTI CL=F and Brent BZ=F at Year-End 2025: Cheap for a Reason
Spot Oil: WTI Around $58, Brent Near $61 After a Brutal Year for Crude
Front-month WTI crude (CL=F) is trading in the high-$57s to about $58.00–$58.30 per barrel, while Brent (BZ=F) sits roughly at $61–$62. Screens show quotes like WTI $58.26–$58.31 and Brent $62.00, with intraday moves of only 0.1–0.4%. A parallel quote set has Brent at $61.20 and WTI at $57.77–$57.90, underscoring how tightly the market is coiled around this band. By year-end, that leaves Brent down roughly 18% in 2025 and WTI lower by about 15–20%, the deepest yearly drawdown since the 2020 COVID collapse and close to a third straight losing year for Brent. Volatility is strikingly muted: geopolitical shocks that once produced double-digit spikes now generate short, forgettable bounces before the trend reverts to a heavy, grinding drift.
Supply Surge Versus Sub-1 Million bpd Demand Growth: Structural Oversupply
The core problem for Oil, not the headlines, is the math. Global demand growth for 2025 is running at only ~830,000 barrels per day, with 2026 pencilled at around 860,000 bpd. Against that, total supply is climbing at roughly 3.0 million bpd in 2025 and projected to add another 2.4 million bpd in 2026, driven mostly by non-OPEC+ producers – the US, Brazil, Guyana, Canada and others bringing on long-lead projects and aggressive shale programs. That 3–4x imbalance is already visible in inventories: observed global stocks are around 8.03 billion barrels, the highest level in four years, with average builds of ~1.2 million bpd over the first ten months of 2025. One major energy forecaster estimates an implied surplus close to 3.7 million bpd from Q4 2025 through 2026, equivalent to almost 4% of global demand – an enormous overhang at this stage of the cycle and the foundation for the current “glut” narrative.
Oil on Water, Sanctioned Barrels and the “Super Glut” Narrative
This surplus is not just on paper. A growing share sits as “oil on water” – cargoes in transit, floating storage, and sanctioned volumes struggling to find final buyers. Long-haul flows from the Americas to Asia are swelling, and Russian and Venezuelan barrels are being rerouted through longer, less efficient routes thanks to sanctions and price caps. Trading desks talk openly about a potential “super glut” in 2026, driven by new output from Brazil and Guyana, resilient US shale, and slower demand from China as EV penetration accelerates. With inventories building on land and at sea simultaneously, it becomes very hard for WTI (CL=F) and Brent (BZ=F) to sustain any risk-premium rally unless physical supply is genuinely removed, not just delayed.
Inventory Data: Crude, Gasoline and Distillates All Point to Comfortable Supply
The latest weekly stock data reinforces the oversupply story. US commercial crude inventories rose by about 405,000 barrels to 424.82 million, against expectations for a 2.4 million-barrel draw. Gasoline stocks jumped 2.9 million barrels to roughly 228.49 million, far above the 1.1 million-barrel build consensus. Distillate inventories edged up by about 202,000 barrels to 118.7 million, roughly in line with forecasts but still adding to the cushion. Under normal conditions this combination – a crude build plus outsized gasoline increases – would be aggressively bearish for Oil. The reality: the market barely flinched. On the same day those numbers printed, Brent still settled near $61.94, up $1.30 (+2.1%), and WTI around $58.08, up $1.34 (+2.4%), purely on geopolitical headlines. That tells you the short-term tape is headline-driven, but the underlying balance sheet is clearly comfortable.
Geopolitics: Russia Discounts, Venezuela Shut-Ins and the Limits of Risk Premium
Geopolitics has been loud all year; pricing impact has been modest. Russian barrels are being heavily discounted, with export prices reportedly $20–$30 per barrel below Brent, pushing net oil export revenues (in local currency terms) from roughly 7.6% of GDP down to about 3.7%. Real growth is fading: GDP expanded only 0.6% year-on-year in Q3, down from 1.4% in Q1 and 1.1% in Q2, and official forecasts now see growth of just 0.5–1.0% for 2025 and 0.5–1.5% for 2026, a steep comedown from 4.3% in 2024 when defence spending and high energy receipts propped up activity. On top of that, the price cap on Russian exports is being ratcheted down again, from roughly $47.60 to $44 per barrel, and policymakers in Europe are openly discussing a full ban on maritime services support for Russian energy shipping – a step that would effectively kill the current cap regime and force even deeper discounts. In Venezuela, the US blockade has clogged export routes and restricted diluent flows. The state producer has started shutting wells in the Orinoco Belt, targeting about 15% of national output – cutting extra-heavy production in that region by ~25% to around 500,000 bpd out of total national output near 1.1 million bpd. Those barrels matter for specific heavy-sour refinery systems, but the broader market impact is softened by ongoing exports under a special license from one US major and by replacement supplies from other heavy-sour producers. Elsewhere, attacks on Russian energy infrastructure in Ukraine, tensions around the Strait of Hormuz, and recurring US–Iran and US–Venezuela friction produced short bursts of strength in BZ=F and CL=F, but each spike faded quickly. The consistent pattern: geopolitical risk is being faded because the barrel count is still too high.
OPEC+ Strategy and the Jan. 4 Meeting: Trying to Manage a Wave
Into this backdrop, OPEC+ is walking a tightrope. Current guidance is to gradually unwind the production cuts that previously supported the market, not to add new cuts immediately. Internal numbers imply that if the group keeps output around 43.0 million bpd in 2026, demand for its crude would sit roughly at the same level – in other words, a balanced picture. In contrast, independent forecasters are still talking about a 3.8–3.9 million bpd global surplus next year. That huge gap in outlooks means the online OPEC+ meeting on January 4 is a key catalyst. If the bloc simply confirms a slow unwind, the market will read that as acceptance of lower prices and will keep pressing Brent toward the mid-$50s. That view is already visible in commentary suggesting oversupply could drag Brent to around $55 in early 2026. If, however, producers blink and float the idea of deeper or longer cuts, they can probably defend the $60–65 area in BZ=F for a while. Credibility is the issue: non-OPEC supply is growing so quickly that even a disciplined OPEC+ has to work harder each quarter just to stand still.
Price Expectations: What Executives and Agencies See for WTI CL=F
Oil company executives and official forecasters are not pricing a return to $80 in the core planning scenarios. In the latest regional Fed energy survey, 116 executives put the mean WTI expectation at $59 in six months, $63 in one year, $69 in two years, and $75 in five years. A separate question to 128 firms put the average expected end-2026 WTI price at $62.41, with a wide range from $50 to about $82.30, and a survey-period spot price near $59. For capital planning, 119 companies say they are using roughly $59 WTI for 2026 projects, down sharply from the $68 price deck used a year earlier for 2025 budgets. Official outlooks are even more conservative. One key government energy office projects WTI averaging about $65.3 in 2025 and just $51.4 in 2026, with quarterly numbers stepping down from roughly $59.3 in Q4 2025 to about $50.9 in Q1 2026 and $50.7 in Q2, then hovering near $52 in the second half of next year. A widely followed composite forecast has Brent averaging around $69 in 2025 and $55 in 2026, with WTI around $65 and $51 over the same period. Sell-side banks cluster in a similar band: one flagship house has Brent at $56 and WTI at $52 in 2026, another nudges Brent to $60 in early 2026, and a broader analyst poll lands Brent near $62 and WTI near $59 on average. Strip away the noise and the message is blunt: the consensus sees CL=F and BZ=F oscillating in the low-50s to low-60s next year, not ripping back to 2022 highs.
End-December Tape: Strong Dollar, Thin Liquidity and OPEC+ in Focus
Into the last trading session of 2025, the micro picture is straightforward. Brent around $61.20 is off marginally from a $61.27 close; WTI near $57.77–$57.90 is down a token $0.05–$0.06 from the prior session. The US dollar index is trading just above 98.0, up roughly 0.06%, mechanically hurting foreign-currency demand because oil is priced in dollars. At the same time, markets are clearly leaning toward oversupply: headlines talk about “ample supply,” strong non-OPEC output, elevated inventories and the planned unwinding of cuts. The only near-term event anyone is really watching is that Jan. 4 virtual OPEC+ meeting, where producers will reassess first-half 2026 policy. Until that lands, liquidity is thin, and price action is more about position-squaring than genuine trend change.
Macro Context: Equities Rally, Gold Explodes and Oil Loses Its Inflation Halo
Macro flows are not favouring Oil as an inflation hedge. The S&P 500 is sitting around 6,900, up roughly 17% year-to-date, with the Nasdaq ahead by more than 20% and the Dow near 48,462 after a year of big swings, Fed cuts and a late-year consolidation around the 50-day moving average. At the same time, gold is near $4,350 per ounce, up about 64.7% in 2025, outperforming everything and pushing the S&P 500/gold ratio down roughly 29% this year – far below its ten-year average near 2:1. Some institutional surveys now openly discuss $5,000 gold and an S&P 500 at 10,000 in a 2026 bull scenario. That tells you where the market sees scarcity and monetary debasement risk: in precious metals and large-cap tech, not in crude. Oil, by contrast, is trading like a cyclical commodity trapped in a surplus, not a structural hedge against the system.
Technical Picture for WTI CL=F: Short-Term Bounces Inside a Larger Downtrend
Technically, WTI crude futures (CL=F) are in a classic bear-market bounce. Prices are edging higher on New Year’s Eve, but they remain well below the descending 50-day exponential moving average and a clear downtrend line. That cluster of resistance sits only a few dollars above current levels and has rejected every attempt to build a sustainable rally over the past few months. Repeatedly, short-term spikes are being sold. The tape reflects the fundamental story: there is “a lack of demand for the massive amount of supply that is still out there”, particularly from North America and new Atlantic Basin producers. For a trader, the setup is straightforward: fade exhaustion after short rallies, especially as CL=F approaches the resistance band around the 50-day EMA, and look for a retest of recent lows once holiday liquidity normalises. The bear trend remains intact until WTI can hold above that moving average and the downtrend line with strong volume – something it has failed to do so far.
Brent BZ=F: Room to $64–$65, but Sellers Are Waiting
The Brent (BZ=F) structure is similar, with minor differences. There is slightly more room for an upside push before the 50-day EMA and the descending trendline converge, giving scope for a rally toward roughly $64, and possibly a spike toward $65, where previous support turned into hardened resistance. That $64–$65 zone is where the real fight starts. Given the fundamental backdrop – inventory builds, surplus projections and OPEC+ signaling only a pause in hikes, not an emergency cut – every pop into that band is likely to meet heavy selling from producers, macro funds and systematic trend followers still positioned short. Unless there is a genuine supply disruption or a radical shift from OPEC+, the probability skew remains that BZ=F will stall in the mid-$60s and roll back toward the recent lows rather than break into a new bull market.
2025 in Context: Record Drop, Three-Year Losing Streak Risk and Volatility Fatigue
Across the full year, Oil has delivered exactly what long-only investors didn’t want: large negative returns with limited hedging benefit. One year-end summary points to “more than a 10% decline” in 2025, with Brent futures off nearly 18% – the biggest annual slide since 2020 – and flirting with a third consecutive year of losses. WTI around $57.90 is roughly 15% below where it started the year. What is unusual is not just the drawdown, but the low realised volatility despite continuous wars, sanctions and shipping incidents. Geopolitical fatigue is real: traders are no longer willing to pay up simply because something blows up somewhere. They want proof that barrels are gone for good. When the fundamental driver is a structural surplus, every transient shock is quickly arbitraged away.
Micro and Macro Drivers into 2026: Bearish Weight vs. Bullish Backstops
Looking ahead, the balance of forces is skewed but not one-sided. On the bearish side, the main elements are clear: projected surpluses of 3–4 million bpd, inventory levels above 8 billion barrels, top-down forecasts of Brent in the mid-50s and WTI low-50s in 2026, and continued capacity additions in the US, Brazil, Guyana and Canada. Add in a firm US dollar near 98, slower Chinese and European growth, accelerating EV penetration and tariffs that dampen trade, and the result is a demand curve that struggles to keep up even with modest price cuts. On the bullish side, there are real backstops. WTI in the $50–60 band is at or below breakeven for many new US shale wells, which will eventually curb US production growth if prices stay depressed. Heavy-sour barrels from Russia and Venezuela are under continuous pressure from sanctions and enforcement, tightening specific grades even when headline balances look loose. Ongoing conflicts around Ukraine and the Middle East, plus the risk of a harder-than-expected landing in Russian output under a lower price cap and potential maritime services ban, can quickly remove meaningful volume. And crucially, OPEC+ still has spare capacity and a demonstrated willingness to adjust if prices collapse below the level needed to fund domestic budgets. That is why most official and private forecasts point to mid-50s to low-60s averages, not a structural slide into the $30s.
Verdict on Oil: WTI CL=F and Brent BZ=F Are a Tactical Sell on Rallies, Strategic Hold
Putting the numbers together, Oil is cheap relative to the last three years but not obviously mispriced relative to its own fundamentals. At WTI around $58 and Brent around $61, the market is already discounting a lot of the 2026 surplus story, but not all of it. Agencies, banks and corporate planners are effectively converging on a $50–60 equilibrium band for CL=F and a mid-50s to low-60s band for BZ=F. With inventories elevated, supply growth outpacing demand by a wide margin and OPEC+ only hinting at restraint rather than emergency cuts, the bias for the next 6–12 months is mildly bearish with capped downside. From a trading and allocation standpoint, the clean stance is:
– Directional view on WTI CL=F and Brent BZ=F: Bearish bias.
– Rating: HOLD overall, with a tactical SELL-ON-RALLIES approach.
In practice that means using moves toward $64–$65 on Brent BZ=F and the low-$60s on WTI CL=F to trim length or initiate shorts, while expecting OPEC+, shale discipline and geopolitical risk to defend the low-$50s on sustained declines. Oil is no longer the star of the macro show; it is a range-bound, surplus-driven market where the edge lies in timing the swings, not in betting on a structural bull run.
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