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WTI crude fell to $56 as ceasefire hopes and weak China data pressured prices in a well-supplied market.
USO is down about 11.8% year to date as global supply is expected to outpace demand this year and next.
SCO gained 5.9% in a week as traders boosted bearish bets amid oversupply fears and geopolitical uncertainty.
The U.S. oil benchmark dropped to its lowest level since February 2021 as traders assessed renewed optimism around a potential deal to end the war in Ukraine, per Bloomberg, as quoted on Yahoo Finance. Also, mixed economic signals from China led to the oil price slump.
West Texas Intermediate settled at around $56 a barrel on Dec. 17 amid light trading. Fresh diplomatic efforts by U.S. negotiators to offer stronger security guarantees to Kyiv revived hopes of a ceasefire.
Ceasefire Hopes Weigh on Prices
Any agreement to end the conflict could ease restrictions on Russian oil flows, ending supply disruptions in an already well-supplied global market. Plus, signs of economic weakness in China, a key consumer of crude, also added to the oil market pressure.
China’s retail sales growth missed estimates in November (per CNBC). China’s economy remains pressured by weak external conditions, inadequate domestic demand, and operational challenges. In November, official data showed that industrial output rose 4.8% year over year, the lowest in 15 months, amid weaker momentum in manufacturing and utilities, per TradingEconomics.
Oversupply Fears Persist
WTI crude exchange-traded fund (ETF) United States Oil Fund LP (USO - Free Report) has lost about 11.8% (as of Dec. 16, 2025) so far this year. Global supply is expected to outpace demand this year and next. Concerns about a potential glut are increasing in Middle Eastern crude markets, per Bloomberg, as quoted on Yahoo Finance.
Geopolitical Risks Still Linger
However, lingering uncertainties around the details of any peace deal could provide some price support. Additional geopolitical risks remain, including intensified Ukrainian attacks on Russia’s Caspian energy infrastructure, disruptions to Black Sea shipping, and concerns over possible U.S. military action in Venezuela following the recent detention of a supertanker by the Trump administration, per Bloomberg, as quoted on the same Yahoo Finance article.
What Lies Ahead?
IEA forecasts U.S. crude oil production will average 13.5 million barrels per day (b/d) in 2026, about 100,000 b/d less than in 2025.IEA also expects the West Texas Intermediate crude oil price to average $65 per barrel (b) in 2025 and $51/b in 2026, both lower than the 2024 average of $77/b.
Per Petroleum Economist, oil prices may be under pressure next year due to a supply glut, but over the longer term, the risk is underinvestment, with demand continuing to grow past 2030. If surpluses develop, either OPEC+ or sanctions must cut supply; otherwise, prices will slide until high-cost producers, especially U.S. shale, back off.
However, huge power demand from data centers and the crypto mining industry may boost the demand outlook for oil and raise prices.
Inverse Oil ETFs in Focus
Against this backdrop, investors may continue to bet on inverse oil-based exchange-traded funds (ETFs). ProShares UltraShort Bloomberg Crude Oil (SCO - Free Report) jumped 5.9% over the past week while MicroSectors Energy 3X Inverse Leveraged ETNs (WTID - Free Report) added 4.1% during the same timeframe.
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Can Oil Prices Rally in 2026? ETFs in Focus
Key Takeaways
The U.S. oil benchmark dropped to its lowest level since February 2021 as traders assessed renewed optimism around a potential deal to end the war in Ukraine, per Bloomberg, as quoted on Yahoo Finance. Also, mixed economic signals from China led to the oil price slump.
West Texas Intermediate settled at around $56 a barrel on Dec. 17 amid light trading. Fresh diplomatic efforts by U.S. negotiators to offer stronger security guarantees to Kyiv revived hopes of a ceasefire.
Ceasefire Hopes Weigh on Prices
Any agreement to end the conflict could ease restrictions on Russian oil flows, ending supply disruptions in an already well-supplied global market. Plus, signs of economic weakness in China, a key consumer of crude, also added to the oil market pressure.
China’s retail sales growth missed estimates in November (per CNBC). China’s economy remains pressured by weak external conditions, inadequate domestic demand, and operational challenges. In November, official data showed that industrial output rose 4.8% year over year, the lowest in 15 months, amid weaker momentum in manufacturing and utilities, per TradingEconomics.
Oversupply Fears Persist
WTI crude exchange-traded fund (ETF) United States Oil Fund LP (USO - Free Report) has lost about 11.8% (as of Dec. 16, 2025) so far this year. Global supply is expected to outpace demand this year and next. Concerns about a potential glut are increasing in Middle Eastern crude markets, per Bloomberg, as quoted on Yahoo Finance.
Geopolitical Risks Still Linger
However, lingering uncertainties around the details of any peace deal could provide some price support. Additional geopolitical risks remain, including intensified Ukrainian attacks on Russia’s Caspian energy infrastructure, disruptions to Black Sea shipping, and concerns over possible U.S. military action in Venezuela following the recent detention of a supertanker by the Trump administration, per Bloomberg, as quoted on the same Yahoo Finance article.
What Lies Ahead?
IEA forecasts U.S. crude oil production will average 13.5 million barrels per day (b/d) in 2026, about 100,000 b/d less than in 2025.IEA also expects the West Texas Intermediate crude oil price to average $65 per barrel (b) in 2025 and $51/b in 2026, both lower than the 2024 average of $77/b.
Per Petroleum Economist, oil prices may be under pressure next year due to a supply glut, but over the longer term, the risk is underinvestment, with demand continuing to grow past 2030. If surpluses develop, either OPEC+ or sanctions must cut supply; otherwise, prices will slide until high-cost producers, especially U.S. shale, back off.
However, huge power demand from data centers and the crypto mining industry may boost the demand outlook for oil and raise prices.
Inverse Oil ETFs in Focus
Against this backdrop, investors may continue to bet on inverse oil-based exchange-traded funds (ETFs). ProShares UltraShort Bloomberg Crude Oil (SCO - Free Report) jumped 5.9% over the past week while MicroSectors Energy 3X Inverse Leveraged ETNs (WTID - Free Report) added 4.1% during the same timeframe.