Unlike the S&P 500 and Nasdaq, which break records almost every week, oil has been struggling. Since January 1, the price of Brent crude has dropped nearly 15%. Not even new sanctions on Russian oil companies or the threat of a U.S. military operation in Venezuela from Trump have been enough to push oil prices back above $70 a barrel, let alone reach 2022 levels.
OPEC+ hasn’t helped either. Its decision to suspend production growth in the first quarter of 2026, after a modest increase in December 2025, citing concerns about oversupply, hasn’t made oil particularly appealing. Even a potential escalation with Iran, while likely to give prices a temporary lift, seems unlikely to have any lasting effect on market confidence.
So why, despite all these potential catalysts, are oil prices not rising?
On one side, traders seem worried about slower economic growth in China, driven by weak domestic demand, issues in the real estate sector, low consumer and investor confidence, and trade tensions with the U.S. — all of which weigh on global fossil fuel demand, clearly a negative for oil. The fact that China’s trade surplus came in at USD 90.07 billion in October, smaller than expectations of USD 95.6 billion, doesn’t help the case.
On the other hand, high U.S. commercial inventories might be keeping a lid on oil’s ability to regain upward momentum. For context, data from the Energy Information Administration show that reserves actually rose by about 5.2 million barrels to 421.2 million, well above expectations of a 2.4 million-barrel decline. Strategic petroleum reserves also ticked up by 500,000 barrels, reaching 409.6 million.
Traders may also face disappointment from a series of upcoming reports. In particular, the OPEC Monthly Oil Market Report, due this Wednesday, could push prices lower if the cartel revises production forecasts in response to slowing global growth. The same applies to the International Energy Agency, which is scheduled to release its annual and monthly reports, and the U.S. Department of Energy, which will present its short-term outlook.
Other factors are also at play. The dollar index has been gaining strength recently, which is typically a headwind for commodities. Oil prices could also react to a potential shift in Fed rhetoric toward a more dovish stance if signs of a weakening labor market continue to emerge. And, of course, geopolitical developments can always surprise — another surge in tensions between China and the U.S. could quickly move markets.