Oil headed for the biggest annual drop since 2020 as war and OPEC+ production cuts failed to propel prices higher in a year dominated by supply growth outside of the grouping, according to Bloomberg.
Brent crude edged higher toward $78 a barrel Friday, but is set to close 2023 about $8 below where it started the year. A broader Bloomberg gauge of commodities has dropped by about 10% over the past 12 months.
Oil ended lower on Thursday after official US data showed that stockpiles at the key Cushing, Oklahoma, storage hub expanded for the 11th week to hit the highest since August. US crude production has been running at a record clip.
Crude is capping a tumultuous year, with prices aided by the outbreak of the Israel-Hamas war, as well as speculation that the Federal Reserve is done with hiking interest rates as inflation wanes. Still, despite repeated cuts to supplies from the Organization of Petroleum Exporting Countries and its allies, rising production from nations outside the cartel, coupled with concerns about slowing demand growth, have combined to drive crude futures lower.
This month, traders have contended with spiking tensions in the Red Sea after vessel attacks by Houthi rebels in Yemen. Half of the world’s container-ship fleet that regularly transits the waterway are now avoiding the route, and crude tankers have also been diverted, lengthening voyages.