Oil Prices Steady as U.S. Stockpiles Decline Counter Soft Demand Expectations

Oil prices remained relatively stable on Wednesday, following a decrease the day before. This stability was influenced by a decline in U.S. crude stockpiles and rising expectations of supply disruptions due to sanctions affecting Russian tankers, despite forecasts indicating lower global fuel demand.

Current Price Movements

Brent crude futures saw a slight increase of 2 cents, reaching $79.94 a barrel as of 0205 GMT. This follows a 1.4% drop in the previous session. Meanwhile, U.S. West Texas Intermediate (WTI) crude rose by 12 cents, or 0.15%, to $77.62 a barrel after experiencing a decline of 1.6% earlier.

Influencing Factors on Prices

The price drop on Tuesday was partly triggered by a prediction from the U.S. Energy Information Administration (EIA) suggesting that oil prices would remain under pressure for the next two years due to anticipated supply surpluses. However, the situation shifted on Wednesday as the market reacted positively to reported decreases in crude stockpiles, which the American Petroleum Institute (API) attributed to strong drops in U.S. inventories.

U.S. Stockpile Insights

According to the API, U.S. crude oil stocks fell by 2.6 million barrels in the week ending January 10. Despite an increase of 600,000 barrels in the Cushing storage hub, where WTI futures are delivered, overall inventories remain historically low.

Gasoline and Distillate Trends

Reports also indicated that gasoline inventories rose by 5.4 million barrels, while distillate stocks climbed by 4.88 million barrels during the same week. A Reuters poll supported these findings, estimating that U.S. crude oil stockpiles would decrease by about 1 million barrels for the same period.

Future Price Predictions

The EIA has projected that Brent prices may decline to an average of $74 a barrel in 2025, with a further drop to $66 in 2026. For WTI, the expectations are similar, predicting an average of $70 in 2025 and $62 in 2026. The EIA's forecast for global demand predicts an average of 104.1 million barrels per day in 2025, slightly lower than previous estimates.

In conclusion, while oil prices are feeling pressure from a softer demand outlook, they are receiving support from declining U.S. stockpiles and the potential for supply disruptions due to international sanctions.

Oil, Prices, Stocks