Crude oil slides more than 10% for the year in first drop since 2020

Crude oil closed 2023 more than 10% lower for its first annual decline in three years, as war and OPEC+ production cuts failed to boost prices enough to overcome rising supply growth outside of the cartel.

Front-month Nymex crude (CL1:COM) for February delivery ended the year -10.7% to $71.65/bbl, and front-month Brent Crude (CO1:COM) for March delivery settled -10.3% to $77.04/bbl, including declines in each of the final three months of the year.

Also, gasoline futures (XB1:COM) fell 14.5% in 2023 to $2.1026/gal, heating oil (HO1:COM) sank 24.1% Y/Y to $2.5531/gal, and natural gas (NG1:COM) plunged 43.8% to $2.514/MMBtu.

ETFs: (NYSEARCA:USO), (BNO), (UCO), (SCO), (USL), (DBO), (DRIP), (GUSH), (NRGU), (USOI)

Many observers predict heightened geopolitical tensions will lift oil prices in 2024, and prices did rise somewhat in December following attacks by Yemen’s Iran-backed Houthi rebels on shipping vessels in the Red Sea.

But gains have proven difficult to sustain, and investors have started to focus on the potential for excessive supply and insufficient demand in oil markets, XM analyst Marios Hadjikyriacos said Friday, according to Marketwatch.

“Even though OPEC+ has taken repeated steps to rein in production and support prices, it is unlikely to pursue the same strategy for much longer, as it would forfeit more market share to U.S. producers who have dialed up their own production to record levels,” Hadjikyriacos wrote.

Oil production outside OPEC+ is expected to more than cover demand growth in 2024, the International Energy Agency said in its December outlook, seeing global oil demand growth dropping to 1.1M bbl/day next year while output outside the group is expected grow by 1.2M bbl/day.

The energy sector (NYSEARCA:XLE) was the year’s second worst performer among the 11 industry groups on the S&P 500, -4.1%.

This year’s top gainers in energy and natural resources: NGL Energy Partners (NGL) +380.1%, Atlas Lithium (ATLX) +306.7%, Genie Energy (GNE) +158.5%, Empresa Distribuidora y Comercializadora Norte Sociedad Anónima (EDN) +147.4%, StealthGas (GASS) +145.6%, Globus Maritime (GLBS) +143.1%, Alpha Metallurgical Resources (AMR) +134.6%, Dorian LPG (LPG) +129.7%.

This year’s top decliners in energy and natural resources: Nine Energy Service (NINE) -80%, BP Prudhoe Bay Royalty Trust (BPT) -79.7%, Verde Clean Fuels (VGAS) -74.4%, Nuscale Power (SMR) -68.6%, Hawaiian Electric (HE) -66.4%, ProFrac Holding (ACDC) -65.6%, Via Renewables (VIA) -64%, Plug Power (PLUG) -63.2%.

Source: Barchart.com