WTI Set for 19% Annual Decline as Oversupply Dominates Year-End Action
Early expectations for 2026 are bearish, but with lingering geopolitical tensions propping up prices. Oil prices may be close to unchanged today, but for the year, they are set to fall more than 15%. Oversupply was the major concern throughout the year, driving prices lower until the nearby futures contract hit its lowest level since 2021 in December.
Reuters is reporting that Light crude oil futures are down nearly 18% for the year, their most substantial annual percentage decline since 2020. Brent is also on track to finish a third year of losses, their longest-ever losing streak. West Texas Intermediate (WTI) crude, also known as Light Crude Oil, is headed for a 19% annual decline.
2026 Forecast: Bearish Q1 Followed by Recovery, OPEC Cuts Limit Downside
My outlook for 2026 calls for lower prices in the first quarter, with WTI hovering near $55.00 to $50.00 per barrel, then a recovery later in the year to $60.00 to $65.00.
Volatility is likely to be skewed to the upside because of the possibility of an escalation in the geopolitical issues and the possibility of a prolonged supply disruption.
What this means is that I don’t see prices falling below $50.00 for a lingering period, but the odds are we could spend some time over $65.00 if supply is disrupted for a long time. I believe that if prices were to fall substantially, OPEC would step in and cut production.
More Information in our Economic Calendar.
