Brent crude and WTI futures fell to their lowest levels since early 2021, triggering market alarm over weakening global demand and potential oversupply. Energy stocks and related ETFs are reacting sharply to the selloff.
- WTI crude dropped to $69.42, Brent to $70.18—lowest since early 2021
- XLE fell 4.8%, USO declined 6.2%, UCO dropped 12.5% intraday
- U.S. crude inventories rose unexpectedly in the latest weekly report
- OPEC+ members showed signs of increased output in November
- Global manufacturing data from China and the Eurozone point to demand slowdown
- Sustained prices below $70 could trigger revised inflation and policy expectations
Global oil markets plunged on Tuesday as both Brent crude and U.S. West Texas Intermediate (WTI) futures dropped below $70 per barrel, marking their weakest levels since early 2021. The decline followed a series of bearish data points, including weaker-than-expected global manufacturing activity and a surprise buildup in U.S. crude inventories. WTI futures closed at $69.42, while Brent settled at $70.18, both down over 5% in a single session. The sharp sell-off reflects mounting concerns about demand destruction, particularly in major economies like China and the Eurozone, where industrial output and transportation activity have cooled. At the same time, OPEC+’s adherence to production cuts has softened, with several members increasing output in November. Analysts note that despite efforts to stabilize prices, the market now faces a structural imbalance between supply and demand. Energy equities have suffered significant losses, with the Energy Select Sector SPDR Fund (XLE) shedding 4.8%, and the United States Oil Fund (USO) falling 6.2%. The leveraged oil ETF UCO, which tracks double the daily performance of crude oil, plunged 12.5% in intraday trading. These movements indicate heightened investor anxiety and potential portfolio rebalancing amid deteriorating commodity fundamentals. The broader implications extend beyond energy markets, with implications for inflation forecasts, central bank policy outlooks, and currency valuations in oil-exporting nations. A sustained drop below $70 could prompt a reevaluation of energy budgets and capital spending plans across the industry.