Crude oil futures rose on Wednesday morning following a report from the American Petroleum Institute (API) showing a decrease in U.S. inventories for the week ending January 10. By 9:58 AM, March Brent oil futures were up 0.28% at $80.14, while March West Texas Intermediate (WTI) crude oil futures increased 0.38% to $76.66.
On the Multi Commodity Exchange (MCX), January crude oil futures were trading at ₹6729, a slight decline of 0.10% from the previous close of ₹6736. February futures were at ₹6653, down 0.06% from ₹6657.
The API report revealed a 2.6 million barrel drop in crude oil inventories for the week ending January 10. However, Cushing crude oil stocks rose by 600,000 barrels, although levels remain historically low. Gasoline and distillate stocks increased by 5.4 million barrels and 4.9 million barrels, respectively.
Warren Patterson, Head of Commodities Strategy at ING Think, and Ewa Manthey, Commodities Strategist, noted that oil prices were firmer in early Asian trading after API data showed a larger-than-expected decline in U.S. crude oil inventories. They also mentioned that concerns over potential disruptions in Russian oil exports due to new sanctions remain unclear but could support prices in the short term.
On Tuesday, oil prices dropped, with ICE Brent falling 1.35% to settle below $80 a barrel. The decline was partially influenced by reports of a possible ceasefire between Israel and Hamas. It marked the first daily drop since the U.S. imposed stricter sanctions on Russia’s energy sector.
The impact of these sanctions on global oil flows is still uncertain. However, ING Think expects that any disruptions will likely be temporary, as Russia will likely find ways to bypass sanctions. This uncertainty may help support oil prices through the first quarter of the year.
Meanwhile, the U.S. Energy Information Administration (EIA) predicted in its January short-term energy outlook that global oil production will surpass demand over the next two years, putting downward pressure on prices. The EIA forecasted that Brent crude oil prices will average $74 per barrel in 2025, down 8% from 2024, and will continue to decline to $66 per barrel by 2026.
The EIA expects that the unwinding of OPEC+ production cuts, coupled with strong growth in non-OPEC+ oil production, will increase global supply. At the same time, global oil demand will continue to grow at a slower pace compared to pre-pandemic trends.
In other commodity markets, January natural gas futures on MCX were trading at ₹337.60, down 3.07% from ₹348.30. On the National Commodities and Derivatives Exchange (NCDEX), January dhaniya contracts were at ₹7,526, down 0.71% from ₹7,580. January jeera futures were trading at ₹22,900, a 0.67% decrease from ₹23,055.
Related Topics:
- Kazakhstan’s Black Sea Oil Exports Fell Short of Targets in 2024
- Standard Chartered: U.S. Oil Production Growth Set to Slow in 2025
- Fuel Inventories Surge Sharply, Outpacing Crude Oil Decline