Brent crude falls below $60 per barrel for first time in 5 years

Korea Economic Daily

Summary

Brent crude prices fell below $60 per barrel for the first time in five years.
It said the downtrend in oil prices is expected to continue next year due to excess supply, economic uncertainty, and prospects for supplies of Russian oil.
It said a U.S. military offensive against Venezuela is expected to hit supplies of Venezuelan oil.

WTI traded around $56 per barrel

Excess supply expected to keep oil prices on a downward trend into next year

The price of Brent crude, the international benchmark for oil, fell below $60 per barrel for the first time in five years. Due to excess supply, this decline in oil prices is expected to continue into next year.

On the 16th (local time) on the European ICE exchange, Brent crude traded at $59.96 per barrel. $60 has been regarded as a support level for Brent crude. U.S. West Texas Intermediate (WTI) was trading around $56 per barrel.

This drop in oil prices is due to a large supply glut caused by the Organization of the Petroleum Exporting Countries (OPEC) increasing production and increased new supplies from North and South American countries, despite limited demand due to economic uncertainty in the U.S. and China, the largest importer.

Moreover, growing expectations of a negotiated settlement to end the war between Russia and Ukraine and the prospect of full-scale supplies of Russian oil are also fueling the decline in oil prices. Conversely, if the United States were to launch a military offensive against Venezuela, one of the major oil-producing countries, it is expected to hit supplies of Venezuelan oil.

Kim Jeong-a, contributing reporter kja@hankyung.com