Oil prices finishing on decline for ’18

After two years of gains, prices are on track for a 26 percent drop.

Oil headed for its first annual decline since 2015, slumping more than 20 percent in a turbulent year that saw fears of scarcity turn to expectations of a surplus.

Crude surrendered early gains on Monday and fell as much as 1.3 percent in New York, on track for the worst quarterly drop since the last oil market crash began four years ago. There’s growing concern the U.S.-China trade dispute and tightening Federal Reserve monetary policy are weakening global demand. Five American manufacturing indexes all dropped in December, the first such acrossthe-board decline in two years.

Highlighting the muscle of U.S. crude drillers, stockpiles at a key storage hub in Oklahoma probably rose 1.2 million barrels last week, according to a Bloomberg survey of analysts released Monday. While President Donald Trump touted progress in trade talks earlier in the day, a key manufacturing indicator also showed Chinese factory activity contracting again.

“You have activity in the world’s second-biggest oil consumer declining,” said Bob Yawger, director of futures at Mizuho Securities USA. U.S. oil exports “have saved the day recently but if that’s not going to continue and you’re going to build storage, that’s not a good sign.”

Prices are on track for a 26 percent decline in 2018 after climbing about 60 percent in the previous two years.

Brent for March settlement declined 28 cents to $52.93 on the London-based ICE Futures Europe exchange. The global benchmark crude has lost about a third of its value this quarter. It’s trading at a premium of $7.61 to March WTI.

Crude’s moves have been amplified by gyrations in equity markets, which have propelled an oil-price volatility gauge to more than double over the past three months.

“We are most likely past the peak of this long economic uptrend,” said analysts at JBC Energy GmbH in Vienna.

Oil jumped to a four-year high in early October on concern that renewed U.S. sanctions on Iran’s oil exports would tighten supply. But Trump’s surprise decision to grant waivers to many buyers pushed prices into a bear market within weeks.

“Trump has reigned as the ultimate controller of oil prices this year because everything from sanctions against Iran, the trade war with China and even tensions with Saudi Arabia, he’s been involved,” said Sungchil Will Yun, a commodities analyst at HI Investment & Futures Corp. “While prices won’t fall further from here, the pace of increase will also be quite gradual next year.”