Oil prices edged lower on Wednesday (December 25th), and are on track for their steepest annual decline since 2020 as investors weigh US economic growth and assess the risk of supply disruptions from Venezuela and Russia.

Brent crude futures closed down 14 cents, or 0.2%, at $62.24 a barrel, while US West Texas Intermediate crude futures fell 3 cents, or 0.05%, to $58.29. Both contracts have risen about 6% since December 16th, when they plunged to their lowest levels in nearly five years.

"What we've seen over the past week is a combination of slight position adjustments in the market after last week's decline failed to gain momentum, coupled with rising geopolitical tensions including the US blockade of Venezuela, supported by strong GDP data last night," said IG analyst Tony Sycamore.

US data showed the world's largest economy grew at its fastest pace in two years in the third quarter, driven by strong consumer spending and a sharp increase in exports.

However, Brent and WTI prices are expected to fall about 16% and 18%, respectively, this year, the sharpest declines since 2020 when the COVID-19 pandemic hit oil demand, as supply is expected to exceed demand next year.

On the supply side, disruptions to Venezuelan exports have been the most significant factor driving up oil prices, while attacks by Russia and Ukraine on each other's energy infrastructure have also supported the market, Haitong Futures said in a report.

More than a dozen loaded ships are in Venezuela awaiting new directions from their owners after the US seized the supertanker Skipper earlier this month and targeted two additional vessels over the weekend.

"Volatile holiday trading looks set to become the norm here, with the Venezuelan blockade a focal point heading into the holiday weekend," said Dennis Kissler, senior vice president of trading at BOK Financial.

Additionally, oil shipments from Kazakhstan via the Caspian Pipeline Consortium are expected to fall by a third in December to their lowest level since October 2024 after a Ukrainian drone attack damaged facilities at the main CPC export terminal, two market sources said on Wednesday.

U.S. crude oil inventories rose by 2.39 million barrels last week, while gasoline inventories increased by 1.09 million barrels and distillate inventories increased by 685,000 barrels, market sources said, citing figures from the American Petroleum Institute on Tuesday.

The U.S. Energy Information Administration is scheduled to release official inventory data on Monday, later than usual due to the Christmas holiday. (alg)

Source: Reuters.com