Crude oil prices continued their downward trend on Monday, with SC crude hitting a fresh yearly low. Both European and U.S. benchmarks also declined, with Brent crude likely to fall below the $60 per barrel threshold again. Despite geopolitical tensions—including renewed Russia-Ukraine energy facility strikes and challenges to Venezuelan oil exports—prices failed to stage a meaningful rebound. Asian trading saw sideways movement, followed by another dip after China's market close.
Market focus remained on Ukraine-U.S. negotiations to end the Russia-Ukraine conflict. Early Monday, Trump envoy Steve Witkoff reported "significant progress," though talks continued into the day. By Tuesday, U.S. officials described the Berlin discussions as "very positive," citing preliminary consensus on key issues and movement toward a peace deal. Trump declared the parties "closer than ever" to an agreement, but oil prices hit fresh multi-month lows, with SC crude setting a new 2025 bottom.
However, Ukrainian President Zelensky noted "productive" Berlin talks while acknowledging U.S.-Ukraine differences on territorial issues. A German government statement confirmed Western commitments to Ukraine's security and economic recovery, including a U.S.-led ceasefire verification mechanism and strong EU accession support. The statement emphasized that no agreements are final until full consensus is reached. U.S. officials revealed 90% of Ukraine-Russia issues are resolved, with readiness to continue talks in Moscow if needed. While peace momentum appears strong, the remaining 10% could prove contentious, maintaining downward pressure on oil prices. Trading strategies should prioritize opportunistic short positions with careful timing.
**Market Data** - WTI crude fell 1.08% to $56.82/barrel; Brent dropped 0.92% to $60.56 - INE crude declined 1.58% to 430.2 yuan - USD index dipped 0.12% to 98.28
**Key Developments** 1. **Trump Optimistic on Ukraine Peace**: The U.S. president reported "good conversations" with European leaders about the conflict, stating a peace deal is nearer than ever. Security guarantees resembling "NATO Article 5" are under discussion, with 90% of Ukraine-Russia issues reportedly resolved.
2. **Middle East Crude Weakens**: Murban crude premiums hit two-week lows amid ample supply. Kazakhstan's plans to accelerate new Caspian pipeline moorings added to oversupply concerns. Oman/Dubai differentials held steady while Upper Zakum trades settled at $61.25/barrel.
3. **Iranian Exports Slow**: Kpler data shows Iran's December crude shipments averaging 1.27 million bpd—down sharply from 1.8+ million bpd in prior months. Floating storage surged to 46 million barrels, the highest since mid-2023.
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